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7/16/2015

Belgium Passes Law Against "Vulture Funds"

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Belgium Passes Law Against Vulture


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Posted By: Brendan Byrne (http://www.valuewalk.com/author/brendan-byrne/)


Posted date: July 02, 2015 03:58:44 PM In: Business (http://www.valuewalk.com/category/business/)
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Lawmakers in Belgium have voted in favor of a new law governing "vulture funds."

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The law will effectively place a limit on how much the funds can claw back from
government debt (http://www.valuewalk.com/2015/06/puerto-rico-default-2/),
which they buy incredibly cheaper from countries
(http://www.valuewalk.com/2015/01/belgium-anti-terror-operation/) that are in
serious financial difficulty, according to AFP (http://www.businessinsider.com/afpbelgium-adopts-law-against-vulture-funds-2015-7).

(http://www.valuewalk.com/wp-content/uploads/2013/04/Belgium.jpg)

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7/16/2015

Belgium Passes Law Against "Vulture Funds"

Belgian lawmakers show widespread support


The vast majority of Belgium's (http://www.valuewalk.com/2015/04/malonesliberty-global-buying-belgian-wireless-carrier-base/) major political parties voted in
favor of the new law, which allows a Belgian judge to determine whether a fund is
acting as a "vulture," and attempting to profit from a potential default. If they do so,
the fund will be prevented from claiming the face value of the bond, and will only be
able to claim the discounted price paid.
Belgium was recently dragged into a legal battle between a group of U.S. "vulture
funds" led by NML Capital Management and Argentina. Court cases have rumbled on
for over ten years concerning over $1.3 billion of defaulted debt.
In recent developments, NML requested that Argentinian accounts be frozen in the
Belgian capital of Brussels, drawing the country into the complicated legal wrangling.
Such a move is outlawed under the new law, which gives Belgian judges the power to
overrule legal decisions made in courts in foreign countries.

U.S. firms lobbied against new law


The new law has important implications for the continued operation of clearing house
Euroclear, which handles a huge amount of global financial transactions
(http://www.valuewalk.com/2015/07/a-case-study-for-using-life-settlements/).
This March a U.S. judge demanded that Euroclear block any payments related to
Argentine bonds, and ordered the company to notify NML and other Hedge Funds
(http://www.valuewalk.com/tag/hedge-funds/) about any activity.
Socialist MP Ahmed Laaouej was responsible for proposing the law, and claimed that
its passing was a "victory over the vultures of finance" which occurred "despite strong
pressure from several national and international lobby groups".
"These pressures came from representatives of American finance and law firms
operating in Europe and defending the interests of some clients, in this case vulture
funds," said Laaouej to AFP.
"This law is a strong signal to unscrupulous investment funds which speculate in a
shameful manner on the back of people in difficulty," he added.
The new law will curtail the influence of foreign rulings on legal proceedings in Belgium,
and is an interesting precedent for rulings on "vulture funds
(http://www.valuewalk.com/2015/06/valuing-a-coal-company-how-do-we-start/)."
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Belgium Passes Law Against "Vulture Funds"


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ABOUT THE AUTHOR


Brendan Byrne
(http://www.valuewalk.com/author/brendan-byrne/)
While studying economics, Brendan found himself comfortably falling
down the rabbit hole of restaurant work, ultimately opening a consulting
business and working as a private wine buyer. On a whim, he moved to
China, and in his first week following a triumphant pub quiz victory, he
found himself bleeding on the floor based on his arrogance. The same
man who put him there offered him a job lecturing for the University of
Wales in various sister universities throughout the Middle Kingdom. While
primarily lecturing in descriptive and comparative statistics, Brendan
simultaneously earned an Msc in Banking and International Finance from
the University of Wales-Bangor. He's presently doing something he hates,
respecting French people. Well, two, his wife and her mother in the lovely
town of Antigua, Guatemala. To contact Brendan or give him an exclusive,
please contact him at theflask@gmail.com

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