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Ecuador $17B Bond Restructuring To Go Forward After Restraining Order Denied in SDNY

By Matthew Russell Lee, Patreon Thread
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, July 31 – Ecuador's restructuring of $17 billion of bonds, the tender for which was extended to August 3, was the subject of a request for a Temporary Restraining Order before U.S. District Court for the Southern District of New York Judge Valerie E. Caproni who held arguments and ruled on July 31. Inner City Press live tweeted it, here:

"Contrarian Capital Markets and GMO Emerging Country Debt Fund" are arguing that Ecuador is lying. Clark of Lathan for plaintiffs: "Even today there's some question whether there has been a good faith communication of the suspension."

Judge Caproni: I saw the press release.

Clark: The evidence will show Clear Stream is telling people they had to tender today.... This is securities fraud. It shouldn't be that a deal this big is pushed through like this.

Dennis Tracey of Hogan Lovells, for Ecuador: "If Republic does not get a super majority, the exchange does not occur."

Judge Caproni: It's self-executing?

Tracey:Yes.... The Republic *is* acting within the 4 corners of the indenture. A super majority can waive any provision of the bonds, prospectively. Here, the offer was to exchange bonds, one for the other, and eliminate the Most Favored Nations provision 

Tracey, for Ecuador: We did not have equal conversations with all bondholders. But we didn't say we did. With $17 billion of bonds, we can't speak with every bondholder.

Judge Caproni: I am prepared to rule.  Plaintiffs want Wells Fargo to return their tendered bonds. The tender was extended to August 3. Now, the temporary restraining order IS DENIED.  Some of this will have to be decided by the Arbitral Tribunal in London.  But the TRO is denied.

Update, later: Judge Caproni is still blasting away at plaintiffs' allegations and complaint. Now she says, "That they futzed around with investors for 2 weeks is not material... In short, based on the complaint that has been filed, plaintiffs are not likely to prevail."

The ruling is finished. A lawyer / partner says, Now we're going to buy our associates a drink.

Judge Caproni: A socially distanced drink!

 Bottoms up. The case is Contrarian Emerging Markets, L.P., et al. v. The Republic of Ecuador, 20-cv-5890 (Caproni).


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