Injunction Math: Acceleration and the Incredible Shrinking Payment Percentage
Here is the relevant language:
Such "Ratable Payment" that the Republic is ORDERED to make to NML shall be an amount equal to the "Payment Percentage" (as defined below) multiplied by the total amount currently due to NML in respect of the bonds at issue in these cases (08 Civ. 6978, 09 Civ. 1707, and 09 Civ. 1708), including pre-judgment interest (the "NML Bonds").
Such "Payment Percentage" shall be the fraction calculated by dividing the amount actually paid or which the Republic intends to pay under the terms of the Exchange Bonds by the total amount then due under the terms of the Exchange Bonds.
Before acceleration, the total amount due from Argentina on the Exchange Bonds is the total unpaid coupon (little x). If Argentina pays the Exchange Bond holders their full coupon before acceleration, the Payment Percentage it owes NML et al. is x/x=1, or 100% of the $1.5 billion or so currently due NML.
After acceleration, the total amount due from Argentina on the Exchange Bonds is full principal and accrued interest on whatever is accelerated, plus unpaid coupon on whatever is not accelerated (big X). If Argentina pays the Exchange Bond holders their total unpaid coupon after acceleration, the Payment Percentage it owes NML et al. is x/X, or a whole lot less than 100% of $1.5 billion.
To be sure, injunction math has not been the main driver of the parties' negotiating posture--last night's press conference suggests that Argentina is sticking to old exchange terms. But for what little it's worth, if people start accelerating, it might make sense to have a Payment Percentage calculator on the ready.