Argentina offered a mixture of cash and bonds to pay off the US$1.44 billion defaulted bonds that the lower court said was due and demandable at full value. While Argentina said it would amount to a profit for bondholders, this was clearly based on the probability that Argentina's economy grows in the next few years.
While the whole defaulted debt amounts to US$11 billion in capital and interest, the proposal would take years to be implemented to even pay off the fraction of US$1.44 billion subject to litigation in an appellate court in New York.
This would be fair to all, according to Argentina's lawyers, who argued in court undert the principle of 'pari passu' clause in bond contracts. This clause means that sovereign debt issuer must treat all bondholders equally.
According to Argentina's lawyers, "This proposal would provide plaintiffs with significant compensation, and unlike the '100 cents on the dollar immediately' formula adopted by the lower court - is consistent with the pari passuy clause, long standing principles of equity and the Republic's capacity to pay."
Argentina's default of its debts in 2005 and 2011 become subject of litigation after bondholders sued in New York.
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