Clauses & Controversies Ep 157 ft. Mitu & Mark
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May 12, 2025 Venezuelan debt recovery efforts unfold as funds attempt to enforce judgments, only to find themselves stuck in a bizarre legal loop. The podcast humorously dissects the absurdities of their situation. Moving to the U.S., a controversial proposal suggests unilaterally extending debt maturities, raising alarms about the Treasury's power. The conversation explores the critical importance of independent legal institutions for maintaining financial stability and investor confidence, alongside the ever-volatile dynamics of global governance.
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Faro's Failed Credit Jumping Strategy
- Faro sued early on Venezuelan bonds to jump the creditor queue and get paid in full before restructuring. - The strategy backfired, and now they want to vacate their judgments to re-enter the queue with a higher claim.
Interest Rates Affect Sovereign Debt Claims
- Lawsuit filing yields higher interest via prejudgment interest, but judgment limits interest to a lower Fed funds rate. - Vacating the judgment would restore the higher claim but impose risk and cost on other creditors.
Sanctions and Enforcement Challenges
- Sanctions complicate enforcement of judgments by blocking asset sales without licenses. - The main issue for creditors is asset priority, not sanctions alone, as they are low in the payout queue.