U.S. Second Circuit Requires Argentina to Pay Defaulted Sovereign Debt Under “Equal Treatment” Clause

On 26 October 2012, the United States Court of Appeals for the Second Circuit upheld permanent injunctions designed to remedy Argentina’s breach of a promise to pay certain bondholders after a 2001 default on its sovereign debt. Relying on an “equal treatment” clause which provided that payment of the bonds ranked at least equally with Argentina’s other present and future bond issuances, the court held that Argentina could not discriminate against the defaulted bonds in favor of bonds issued in its 2005 and 2010 sovereign debt restructurings.  Accordingly, the court enjoined Argentina from making payments on the 2005 and 2010 bonds without making comparable payments on the defaulted bonds.

Please click here to read our Clients & Friends memo on the Second Circuit’s decision.

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