User:Oceanflynn/sandbox/Vulture funds in Argentia

Vulture funds in Argentina

Vulture funds
A vulture fund is a hedge fund or private equity fund that invests in debt considered to be very weak or in imminent default, known as distressed securities.

Sovereign debt collection was rare until the 1950s when sovereign immunity of government issuers was restricted.

1957 The Federal Reserve froze Brazil's gold reserves.

1972 Kansas City, Missouri-born Judge Thomas Poole Griesa (1930-) was nomonated as federal judge for the United States District Court for the Southern District of New York by Richard M. Nixon on June 15, 1972 and confirmed by the United States Senate.

1978 In 1978, Griesa issued an order holding United States Attorney General Griffin Bell in contempt of court for Bell's refusal to turn over FBI records about eighteen "informants" in the Socialist Workers Party. This was the first time that a U.S. Attorney General had been held in contempt for conduct during pretrial proceedings. Although Griesa declined a request to immediately jail Bell for contempt, he did indicate that if Bell failed to comply with the order within a one-week deadline, Griesa would "entertain a motion for more drastic sanctions". Bell indeed refused to comply, and was held in contempt, although this order was stayed pending appellate review. On appeal, the U.S. Court of Appeals for the Second Circuit held that "it was clearly erroneous for the district court to determine that the files are so central to the plaintiffs' case that contempt is the only appropriate sanction for the Government's failure to disclose them", and ordered Griesa to consider alternative sanctions.

2013 Investment in sovereign debt with the intent to recover was also restricted due to the laws of champerty and maintenance and by the fact that most sovereign debt was syndicated. Under the Doctrines of Champerty, it was illegal in England and the United States to purchase a debt with the sole intent of litigating it.

1980s Sovereign debt owed to commercial creditors in the late 1980s was principally held by bank syndicates. This was the result of the petrodollar crisis of the 1970s when oil earnings were recycled into bank loans.

1980s Debt rescheduling efforts in Latin America created many new and easily traded instruments such as Brady bonds that brought new players into the market, including banks and hedge funds.

1992

1999 critics of vulture funds argue that creditors strategically profit off of debtors that are in financial distress. The term vulture fund is derogatory.

2000 Corporations are legally fictional people invented by the state. In practice, however, it is more complicated.

2002 Champerty and maintenance that aim to preclude frivolous litigation. "Maintenance" is the intermeddling of a disinterested party to encourage a lawsuit.

2002 Distressed securities are securities of companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy.

2002 In 2002, the British Chancellor (and later Prime Minister) Gordon Brown told the United Nations that when Vulture funds purchase debt at a reduced price, and make a profit from suing the debtor country to recover the full amount owed, the outcome is "morally outrageous".

2002 Should Countries like Argentina be able to Declare Themselves Bankrupt?, by Anne Krueger

2003 August 2003, Manmohan Singh, IMF Working Paper WP/03/161; "Recovery Rates from Distressed Debt - Empirical Evidence from Chapter 11 Filings, International Litigation and Recent Sovereign Debt Restructurings"

2005 In 2011 Elliott's took Peru to National Express.

2005 The reliability of the Argentine claim ("We are not in default") can be judged by

1. Definition of default in the original prospectus for Argentina’s 2005 debt exchange:

"Notwithstanding the foregoing, Argentina's obligations to make payments of principal and interest on the New Securities shall not have been satisfied until such payments are received by registered holders of the New Securities."

2005 In 2011 Elliott's took Peru to National Express.

2007 Distressed Debt Returns to the Spotlight FTfm, July 30, 2007

2007 The International Monetary Fund and World Bank noted that Vulture funds endanger the gains made by debt relief to poorest countries. "The Bank has already delivered more than $40 billion in debt relief to 30 of these countries...thanks to this, countries like Ghana can provide micro-credit to farmers, build classrooms for their children, and fund water and sanitation projects for the poor," wrote World Bank Vice President Danny Leipziger in 2007. "Yet the activities of vulture funds threaten to undermine such efforts... the strategies adopted by vulture funds divert much needed debt relief away from the poorest countries on earth and into the bank accounts of the wealthy."

2008 Complicating the Morality Play on Vulture Funds (Corrected Story), Christopher Faille, Senior Financial Correspondent, Hedgeworld News, Monday, February 4, 2008

2008 In 2009, bipartisan legislation in the US Congress was introduced aimed to prevent Vulture funds from profiting on defaulted sovereign debt by capping the amount of profit that a secondary creditor can win through litigation based on those debts. The Stop VULTURE Funds Act was introduced, but not passed, in the United States. non-profit financial reform organization, Jubilee USA Network, supported the legislation citing the impact that vulture funds have on poor countries.

2009Elliott Management Corporation By 2009 "more than one-third of Elliott’s portfolio was concentrated in distressed securities, typically in the debt of bankrupt or near-bankrupt companies."

2010 2. Similar in the original prospectus for Argentina’s 2010 debt exchange.

3. all the major rating agencies has declared Argentina to be in default: 3.1. Argentina Put Into Selective Default by Standard & Poor's 3.2. Moody's changes Argentina's outlook to negative as default will hasten economic decline 3.3. Fitch downgrades Argentina to ‘restricted default’ 3.4. China's Dagong Global Credit Rating Co. Cuts Argentina to Default 3.5. The International Swaps and Derivatives Association (ISDA) declares Argentina in default, bonds extend losses.

2010 Investigative Journalist Greg Palast Tracks Vulture Funds Preying on African Debt - video report by Democracy Now!

2010

2010 Legislation passed in 2010 removed the ability of vulture funds to use UK courts to enforce contested debts.

2010 Similar legislation was passed in the United Kingdom, Belgium,

2012 The States of Guernsey debated legislation in 2012.

2012

2013 Jersey, the Isle of Man, Australia.

2013 As far as debt securities, this is called distressed debt. Purchasing or holding such distressed-debt creates significant risk due to the possibility that bankruptcy may render such securities worthless (zero recovery).

2013 Elliott Management Released its ISS Presentation over Argentina's debt

2014 However financiers dealing with vulture funds argue that "their lawsuits force accountability for national borrowing, without which credit markets would shrivel, and that their pursuit of unpaid commercial debt uncovers public corruption." A related term is "vulture investing", where certain stocks in near bankrupt companies are purchased upon anticipation of asset divestiture or successful reorganization.

The term has gained wide acceptance from governments, newspapers, academics and international organizations such as the World Bank, Group of 77, Organisation of American States and Council on Foreign Relations, among others.

31 June 2014Through an official press release published on Friday afternoon, June 27, 2014, the Argentine government stated that Griesa attempted to “block the payment for bondholders,” and committed an abuse of authority, after cancelling the deposit made on Thursday into a Bank of New York account. The text specified “the deposited amounts are fiduciary property of the holders” and it is the duty of the fiduciary agent to “hold them on behalf of the holders’ benefit.” Judge Griesa's ruling was upheld by the full United States Court of Appeals, and the United States Supreme Court found no reason to revise Griesa's ruling.

31 July 2014 According to American economist and recipient of the Nobel Memorial Prize in Economic Sciences, Joseph Stiglitz, with Griesa's decision "America is throwing a bomb into the global economic system".

9 July 2014 The conduct of the vulture funds blocking payments to other creditors to Argentina was denounced by the Organisation of American States, with the exception of the United States and Canada.

15 June 2014 The G77+China also criticised the funds and stated: "Some recent examples of the actions by vulture funds before international courts show their highly speculative nature. These funds pose a danger for all the future process of debt swaps, for developing countries and for developed nations as well".

2014 The US-based Council on Foreign Relations questioned the US Supreme Court for rejecting Argentina’s appeal in its legal dispute with the so-called vulture funds. The organization claimed that such actions make it "more difficult for countries to free themselves from the burden of over-indebtedness" and are " very bad for international capital markets", as well as being a huge blow to national sovereignty. The organization described Thomas Griesa's ruling against Argentina in favour of vulture funds as "punishing the innocent" and "turning the natural order of debt on its head".

On September 9, 2014, the United Nations General Assembly voted to support a new bankruptcy process for sovereign nations, which would promote debt restructuring by excluding so-called "vulture funds" from the process. The vote was 124-11 in favor, with 41 abstentions. The United States voted against the measure.

In 2014, Griesa presided over the Argentine debt restructuring, on remand following the U.S. Supreme Court's decision to permit vulture funds, who in the period June 2001 to November 2003 (that is from half a year before the Argentine default) bought bonds, which are negotiable instruments and therefore, like bond owners all over the world, never drew any pay from the issuing country, to access potentially an array of bank records to locate financial assets overseas in seeking compensation. negotiable instruments like bonds are bought and sold like commodities at the price seller and buyer agree upon. Paul Singer's Cayman Islands-based hedge fund NML Capital Limited is the principal litigant in this dispute, having paid considerably more than US$90 million in the secondary market for bonds with a face value of US$832 million by 2014. It should not come as a surprise that during the intervening 13 years, these bonds have drawn interests as bonds do.

2015 Term vulture funds

2015 Paul Singer's net returns.

Champerty and maintenance that aim to preclude frivolous litigation. exists in US jurisprudence but disdained by "fans of entrepreneurial lawyering in the academy and elsewhere." There has been recent common usage of the term in the media in Nevada and Ohio.

2016 Griesa sees the elevation of Mauricio Macri to the office of President of Argentina as a key development that, in his words, "changes everything" and may lead to a final resolution of the disputes arising from the default.

? "having paid US$49 million in the secondary market for bonds worth USD832 million by 2014" with the July 6th, 2011 judgment from The Supreme Court of the United Kingdom, which makes it clear that the NML Capital Ltd paid more than US$90 million for 20 percent of their bonds:

"Between 6 June 2001 and 2 September 2003 affiliates of NML bought bonds in the two bond series at prices which were, in aggregate, 55.37% and 62.82% of the face value of the respective series. In November 2003, NML asserted that Argentina was in default under the terms of the FAA because of its failure to pay interest on the bonds. NML refused to take part in the 2005 restructuring offer. Instead it issued proceedings against Argentina in the United States District Court for the Southern District of New York, which handles nearly all of New York City's financial litigation. NML claimed that Argentina had committed an "event of default" under the FAA and that, under the terms of the bonds, NML was entitled to accelerated payment of the principal amount of the bonds and outstanding interest. The principal value of the bonds claimed was US$172,153,000. Unpaid interest on the bonds and interest on the unpaid interest claimed amounted to US$112,031,632.30. The total claimed was therefore US$284,184,632.30."

"Sovereign immunity in NML Capital Ltd v Republic of Argentina" - Supreme Court of the United Kingdom - Judgment http://www.supremecourt.uk/decided-cases/docs/UKSC_2010_0040_Judgment.pdf (page 2 (3 in the .pdf))

"Republic of Argentina v NML Capital Ltd [2010] EWCA Civ 41" (04 February 2010) http://www.bailii.org/ew/cases/EWCA/Civ/2010/41.html Litigation funding

ex

 * Cerebral Fund
 * Africa Action Campaign to Stop Vulture Funds US
 * Jubilee Debt Campaign action on vulture funds
 * Investopedia: vulture fund
 * Economics of Vulture Funds -Ft.com
 * Rancman v. Interim Settlement Funding Corp., 99 Ohio St.3d 121 (2003)
 * "VENTURE CAPITALISM FOR LAWSUITS? Why It Doesn't Exist, And What Alternatives For Financing Exist Instead"
 * "The Continuing Struggle Over Litigation Funding"
 * "Defense of champerty no longer valid in South Carolina"
 * "Ethics of Law Loans in the Post-Rancman Era"
 * "Broad prohibition, thin rationale: The "'acquisition of an interest and financial assistance in litigation' rules"
 * " Selling Your Torts:Creating a Market for Tort Claims and Liability" 33 Hofstra L. Rev. 1543
 * " Selling Your Torts:Creating a Market for Tort Claims and Liability" 33 Hofstra L. Rev. 1543


 * This report was the basis so Altman's 1991 publication entitled Distressed Securities.
 * Altman was commissioned by The Foothill Group to prepare a series of “White Papers” on Distressed Debt Markets in 1990 and 1992.
 * This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993.
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993.
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993.
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993.
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com
 * Understanding Distressed Securities
 * Distressed Debt Articles from VCExperts.com

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Category:Fixed income securities Category:Debt Category:Funds Category:Private equity Category:Legal terms Category:Tort law Category:Legal ethics Category:Legal costs Category:Abuse of the legal system