Think of it like this: You’re a teenager asking your parents if you can borrow the car to go hang out with you friends, and your little brother steps in to say that you should be driving him to a piano lesson instead.
This, obviously, is a major bummer.
It’s also basically what Paul Singer and other hedge fund managers suing Argentina for $1.4 billion of sovereign debt are experiencing this week.
Yes, Singer lost the naval vessel he seized from Argentina as collateral last fall, but since then things have gotten better for him. On Sunday, Singer might have even thought he’d won. His lawyers had filed a brief rejecting Argentina’s payment plan (which looked like payment plans the country had submitted before) and the ball was rolling along.
Then there was Monday. As the NY Post reports, that’s when Singer and co. were forced to file a brief telling Italy to back up off their money.
Apparently, Argentina owes Italy money as well, so the Italians filed a brief saying that if Singer gets his money in full, they want theirs in full too.
From their brief (h/t Credit Slips):
[T]he only sensible resolution is a lump-sum payment of all interest and principal that has accrued and become due and payable in eleven years to all the current holders of the holdout bonds … . Such a payment would be directed through an order for specific performance, which this Court has endorsed as the appropriate remedial device. NML Capital Ltd., 699 F.3d at 261-262.4B. [Emphasis in the original.]
Singer and co. hate this. For one, if Argentina ultimately has to pay up to Italy too, Singer and co. may get less money as the cash is spread more thinly.
Not only that, but what Italy is arguing, Argentina has been arguing all along — there are more players in here than just NML, and the Court should treat them all equally. In doing so, Argentina argues, the Court would be opening the country up to $15 billion in debt.
From Argentina’s brief on this matter (h/t Credit Slips):
[T]he Motion demonstrates that the present appeal does not concern “only” the $1.47 billion demanded by NML and the other plaintiffs-appellees …, but potentially the entire amount of outstanding defaulted Republic debt subject to a pari passu clause. … [A]cceptance of the district court’s “ratable payment” formula could open the floodgates for over $15 billion in similar pari passu claims.
And who’s got $15 billion to just hand out? Not Argentina.