Argentina is Not Dancing With the Stars, and Other Tales of Insolvency

By Leon Bayer

Quick story: One fine day in the early 1980′s I was in the Los Angeles courtroom of the Hon. Barry Russell, U.S. Bankruptcy Judge. (Judge Russell is the most senior bankruptcy judge in the U.S. still actively serving.) It was Chapter 13 confirmation day. Elsie Davis, the legendary Chapter 13 trustee in Los Angeles, was asking the Court to dismiss a certain case and do something to stop the debtor from filing any more cases. This debtor was on his 8th Chapter 13 filing. The debtor was present, and the Judge asked him why he had filed so many cases. The man said he filed all of them to save his house. Judge Russell pointed out that if the man had a sincere desire to save his home, maybe he should hire a lawyer. Taking into consideration all the money spent on each filing fee, the man could have already paid for a lawyer to represent him. The debtor replied that he had paid a lawyer to file his first case, which didn’t go so well. He said, “After my first case got dismissed, I decided it was a lot cheaper for me to keep paying filing fees than to keep paying lawyer’s fees.”

The case was dismissed with a bar. But the man did, sort of, have a point.

A Rogues Gallery of Multiple Bankruptcies

Whoever compiles the Rogues Gallery of serial insolvents would be neglectful if that list does not include a certain number of nation states. Nation states do not file “bankruptcy” per se. Rather, they commit what is nicely called, “sovereign default.” But no serious discussion about sovereign default is complete without a discussion of the Argentine Tango.

Mention the tango, and most people think of an exciting, seductive Latin dance. But to me, as a bankruptcy lawyer, I see events through a financial prism. I look at the tango as a struggle between debtors and creditors. One dancer tries to lead (the creditor). The other dancer (the debtor) keeps trying to escape the lead’s grip by using seductive kicks and twirls, only to return again to the clutches of the lead dancer.

To the dismay of international bankers, the Argentines have perfected their national dance at more than one level. That’s because Argentina has defaulted on her debts, again. According to The Economist, this marks the eighth time Argentina has tried to dance her way out of debt.

This latest episode occurred a few days ago. It bears some resemblance to Elsie Davis’s objection over “repeat filing” to that other “ancient” procedure, confirmation. To be precise Argentina is in default on her previous default. This “default in a default” relates back to “claims trading” that took place prior to the last Argentine default in 2001. Some clever claims traders cheaply bought up Argentine debt during the previous default in 2001. Rather than accept a 65% haircut on the 2001 default that was voluntarily accepted by 93% of the debt holders, a few holdout creditors with 7% of the debt never accepted the plan.

Argentina and the 93% accepting creditors danced on, ignoring the claims of the holdouts. All the while the holdouts have been in court trying to get a court order to stop the music. The holdouts just won in U.S. Court. The court enjoined payment of money that was already in the hands of the U.S. bank that administers debt payments for creditors that previously accepted the earlier settlement. Hence, the freezing of Argentina’s payout was the trigger of the most recent default in a default.

debtecuadorThe default of sovereign debts happens all the time. And not just to Argentina. The image to the left (and the others below) are from the Bayer, Wishman & Leotta collection of antique insolvency documents. (Our collection is kind of a carnival freak show of insolvency.)

This certificate entitles the holder to receive payments of principal and interest against Ecuador arising from a sovereign default and a settlement agreement made in 1892.

In the International World Cup of Sovereign Default, Ecuador beat Argentina by a score of 10 times to Argentina’s 8 times. The certificate at left was possibly wiped out by a subsequent default in 1894. I say “possibly” because if any of this debt survived, it surely was wiped out by the next Ecuadorian default in 1900.

indebtnessLocal governments and their agencies are not sovereign states, but they too fall into debt and default. The Chapter 9 cases of Detroit, Michigan, San Bernardino, California, etc. are the structural descendants of an earlier statute. The first valid municipal bankruptcy statute in the U.S. was enacted in 1937 and became Chapter X of the Bankruptcy Act. To the left is a Certificate of Indebtedness. During the Great Depression, cash strapped cities in the State of Ohio could issue these certificates as evidence of small loans received from local citizens. This particular certificate is “blank” and was never issued.


leon bayerLeon Bayer has been practicing bankruptcy law in Los Angeles, California since 1979. His primary focus is on representing individuals and small businesses. He is a founding partner in the law firm of Bayer, Wishman & Leotta and is a Certified Specialist in Bankruptcy Law. You can visit his professional websites at and Mr. Bayer authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004. Mr. Bayer’s professional affiliations and leadership roles are many, and include: President of the Los Angeles Bankruptcy Forum (1995-1996), member of the State Bar of California’s Law Advisory Commission on Personal & Small Business Bankruptcy Law (1996-2000), and exam grader and question writer for the State Bar Legal Specialization test on Bankruptcy. Mr. Bayer is a frequent lecturer on bankruptcy law. He has spoken at the former Bridging the Gap program for new lawyers, lectured on bankruptcy case law developments at a number of the State Bar of California Annual Meetings, and has presented bankruptcy law material at many other educational programs. Mr. Bayer’s frequent television appearances include interviews on KCAL9 News and EXTRA (where he weighs in on various celebrity bankruptcies). He has also served as a bankruptcy expert on many different radio shows and news stations, and is a frequent guest on KALW-FM public radio’s Your Legal Rights. Mr. Bayer is currently co authoring a revised edition of Stephen R. Elias’s The New Bankruptcy for Nolo. Other publications include The Essentials of Chapter 13, Daily Journal Report, December 18, 1987, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993 (contributing editor), and Personal and Small Business Practice in California, CEB Bankruptcy Practice Guide, 2003 (reviewer and contributing author).

Find Leon on Google+

No Author Biography has been linked to this Article.

Related Articles

September 26, 2021
By Dynele Schinker-Kuharich, Chapter 13 Standing Trustee (Canton, OH) On Thursday, September 16, 2021, the bankruptcy community lost a good friend and esteemed colleague, Robert S. Thomas II. In an effort to pay tribute to Robert, who was loved and respected by so many, The NACTT Academy is privileged to share comments, thoughts, and tributes made by Robert’s bankruptcy colleagues....
August 25, 2019
Employers who provide paid family and medical leave to their employees might qualify for a credit that can reduce the taxes they owe. It’s called the employer credit for family and medical leave. Here are some facts about the credit to help employers find out if they might be able to claim it. To be eligible, an employer must: Have...
March 28, 2021
By Henry E. Hildebrand, III, Chapter 13 Standing Trustee (Nashville, TN) Section 1328(i) requires the court to consider the discharge provisions of §§ 1328(a) through (h) and the fact that incomplete personal residence mortgage payments or a forbearance do not preclude but do not compel a COVID-19 Discharge. (Tighe) In re Ritter, 2021 WL 864092 (Bankr. C.D. Cal. March 5,...
Copy of Hildebrand-2016
August 28, 2022
Unanticipated post-petition acquisitions, constituting property of the estate, can be captured for the purpose of repaying creditors. In re Powell, 2022 WL 1043502 (Bankr. C.D. Ill. April 7, 2022)(Perkins) Case Summary Clarence and Betty Powell filed a Chapter 13 petition in February of 2020 and their plan was confirmed that October. The plan required the Powells to make monthly payments...
November 15, 2020
By Lawrence R. Ahern, III, Brown & Ahern (Nashville, TN) Federal Rules of Bankruptcy Procedure Amendments Effective December 1, 2020 The Judicial Conference proposed, and Congress has not changed, the amendments to the following Federal Rules of Bankruptcy Procedure: Rules 2002, 2004, 8012, 8013, 8015 and 8021. Absent Congressional action, which is not expected, they will be effective at the...
Angela scolforo
October 22, 2023
Angela M. Scolforo was appointed as the Chapter 13 Standing Trustee for the Western District of Virginia on April Fool’s Day. She replaced Herbert L. Beskin who served as the Trustee for 20 years, retiring in March of this year. Angela received a B.A. in English from College of the Holy Cross in Worchester, Massachusetts, in1987. She did not immediately go...
October 3, 2021
By Jay Fleischman, Managing Attorney at Money Wise Law (Los Angeles, CA) When the world was forced to adjust to new routines in March 2020 due to the global pandemic, I was instantly struck by how little my professional life changed. I’d worked remotely for over a decade, and my systems and procedures didn’t change. Sadly, the same couldn’t be...
February 17, 2019
By Veronica D. Brown-Moseley, Boleman Law Firm, P.C. (Virginia Beach, VA) Many things can, and often do, change between the time debtors file a Chapter 13 bankruptcy petition and the end of their case. A variety of circumstances impact a debtor’s ability to afford their Chapter 13 plan payments, including but not limited to: medical problems, disability, loss of employment,...
February 27, 2022
Background A recent Chapter 7 case out of the Bankruptcy Court for the Southern District of California, In re Rhodes,1 addressed reaffirmation in a context that should be of interest to debtor's attorneys. As explained in Part 1, Rhodes points out that the "ride-through" of a debtor's secured debt after a Chapter 7 — which Congress . . . It...
November 21, 2021
TFS Bill Pay has launched a new powerful tool to help you succeed; the Attorney Report Center located in your AttorneyPortal. In the current bankruptcy environment, it is absolutely essential that your firm receives all of the compensation for the valuable work it has already done. TFS now provides you with pre-set, real-time reports to confirm your clients’ payments, which...

Looking to Become a Member? offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.


These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: