Also bei den alten, defaulten Argy-DM-Bonds stellt sich die Frage einer narrow (pro rata) oder wide (rateble payment) Interpretation nicht. Die Klausel ist glasklar weit gemein...das wording
payment obligations bzw Zahlungsverpflichtungen ist glasklar....
in respect of the default deutschmark bonds emitted by argentina there is no room in interpretation narrow or wide pari passu / pro rata payment. the wording is very clear !!
also frei Bahn für einen Klageansatz in Ffm unter pari passu / pro rata payment Gesichtspunkten.
However, not all pari passu clauses are drafted in the same format.
They vary according to its drafter, denoting diversity in the language of
the same clause which might derive in a different interpretation. Gulati
and Scott refer to five different variants of the pari passu clause.47
Simplifying the discussion, there are mainly two possible interpretations:
(1) the narrow or “ranking” interpretation, where obligations of the
debtor rank and will rank pari passu with all other unsecured debt; and
(2) the broad or “payment” interpretation, that when the debtor is unable
to pay all its obligations, they will be paid on a pro rata basis (as in the
Elliott case). Wood is of the opinion that the key word is “rank” and that
“rank” means “rank,” not “will pay” or “will give equal treatment.”48
According to Buchheit and Jeremiah S. Pam, the broad or
“payment” interpretation has four practical implications:
(1) It may provide a legal basis for a creditor to seek specific
performance of the covenant; that is,
a court order directing
the debtor not to pay other debts of equal rank without making
a ratable payment under the debt benefiting from the clause.
(2) It may provide a legal basis for a judicial order directed
to a
third-party creditor instructing that creditor not to accept a
payment from the debtor unless the pari passu-protected
lender receives a ratable payment.
(3) It may provide a legal basis for a court order
directing a thirdparty
financial intermediary such as a fiscal agent or a bond
clearing system to freeze any non-ratable payment received
from the debtor and to turn over to the pari passu-protected
creditor its ratable share of the funds.
(4) It may make a
third-party creditor that has knowingly
received and accepted a nonratable payment answerable to the
pari passu-protected creditor for a ratable share of the funds.49
Zitiert nach (S 46/7):
THE PARI PASSU INTERPRETATION IN THE
ELLIOTT CASE: A BRILLIANT STRATEGY BUT AN
AWFUL (MID-LONG TERM) OUTCOME?
Dr. Rodrigo Olivares-Caminal*
aus den ALB der 130 020 (Argy-DM-Anleihe bis 2002)
The Republic of Argentina
DM 500,000,000 10 ½ % Deutsche Mark Bearer Bonds 1995/2002
The issue price of the Bonds is 101% of their principal amount. The Bonds will be issued in bearer form in the
denominations of DM 1,000, DM 10,000 and DM 100,000.
§ 7 Status and Negative Pledge
(1) The Bonds and Coupons constitute (subject to subparagraphs (2) and (3)) direct, unconditional,
unsecured and unsubordinated obligations of the Borrower
and shall at all times rank pari passu without any
preference among themselves.The payment obligations of the Borrower under the Bonds and the Coupons
shall (subject to subparagraphs (2) and (3)) at all times rank at least equally with all its other present and future
unsecured and unsubordinated External Indebtedness (as defined below).
§ 7 Rang und Negativerklärung
(1) Die Teilschuldverschreibungen und Zinsscheine stellen vorbehaltlich der Absätze (2) und (3)
unmittelbare, unbedingte, unbesicherte und nicht nachrangige Verpflichtungen der Anleiheschuldnerin dar,
die
untereinander stets in gleichem Rang stehen. Die Zahlungsverpflichtungen der Anleiheschuldnerin aus den
Teilschuldverschreibungen und Zinsscheinen werden vorbehaltlich der Absätze (2) und (3) stets mindestens im
gleichen Rang stehen mit allen ihren sonstigen gegenwärtigen und zukünftigen unbesicherten und nicht
nachrangigen Auslandsverbindlichkeiten (wie nachstehend definiert).
Print
Can anyone name other sovereign indebtedness: i) with a strong pari passu provision; ii) that is not subject to collective action clauses; and iii) in which the issuer has in fact breached pari passu even by its own self-serving definition ? No, the reality is that Argentina is unique, and the upcoming appellate court decision will simply not have any significant bearing upon other sovereign restructurings.
In his perfunctory disparagement of a US federal judge who has been handing down landmark decisions since Mr. Salmon was still in short pants, Mr. Salmon regrettably serves as apologist for a regime that has distinguished itself through disregard for every norm of modern commerce and international relations – just ask the IMF, the WTO, ICSID, the Paris Club, the anti-money laundering Financial Action Task Force, thousands of Italian pensioners, institutional investors such as TIAA-CREF, companies that invested in good faith, etc. Elliott is hardly alone in challenging a G-20 country with ample liquidity and resources that seeks to wrongly walk away from its lawful payment obligations and US federal court judgments.
Throughout this piece Mr. Salmon adopts as his own the “masterful” arguments of Cleary Gottlieb, the preeminent advocates for defaulting sovereigns. Perhaps his views will change after he considers, as did Judge Griesa, the arguments of opposing counsel. In the meantime:
1) Argentina’s new bonds might indeed have “performed extremely well” since the discounted exchange, yet their value remains vastly below the face value of Argentina’s original obligation. Mr. Salmon is premature in calling this a “rare and public loss” for the “billionaire Republican activist Paul Singer” (surely Mr. Salmon means no aspersion by that . . .), who obviously retains confidence that Argentina can afford to pay its lawful obligations in full.
2) In 2003 Argentina argued that pari passu would be breached if it asserted a legal basis for discrimination among creditors. Two years later it did exactly that by enacting the “Lock Law”, as Olivares-Caminal, Gelpern and others have noted. It is hardly nefarious that a creditor would decline to assert pari passu in 2003 and yet do so now.
3) It is a profound distortion to characterize Judge Griesa’s orders as compelling “innocent bondholders of Argentina’s new debt” to “be paying off Elliott”. There is no such form of transfer within the orders, although Argentina has threatened the court that it might default on the new debt if Judge Griesa’s orders are upheld (despite having been found by the court to have sufficient means to honor all of its obligations).
4) The Deconstructionist notion that pari passu has no meaning runs counter to the logic and experience of those of us who have spent decades actually signing loan agreements. Perhaps the attorneys polled by Gulati have forgotten (or never knew), but involuntary subordination by a rogue sovereign is a clear and visceral concern to anyone who exercises lending authority.
If a country elects to borrow in the capital markets of New York, and cloak its loan agreements in the assurances of New York law and jurisdiction, shouldn’t it pay judgments of the US federal courts ? Why does Mr. Salmon recognize that “[c]ertainly Argentina has no intention of paying . . . anything”, and yet not condemn such willful disdain for the essential bases on which capital markets operate ?