The dramatic showdown between Elliott Management Corp. and Argentina has now become repetitive. At one end, the holdout creditors refuse to budge on their demand of a $1.3 billion payment while on the other hand, Argentina keeps recycling the same payment offer over and over. In response to Argentina’s latest and likely final offer, the hedge funds and holdout creditors led by NML Capital, an affiliate of Elliott, and Aurelius Capital rejected the settlement terms on Friday.

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Argentina offered to exchange the defaulted bonds with new bonds which the holdout creditors called a worse alternative to what they had been offered earlier, not that they had any inclination to accept any of Argentina’s offers. The head-to-head battle that Argentina has been embroiled in with the hedge funds has included name-calling, warship hijacking, and all kinds of drama.

The U.S. courts have been unusually active and strict in brokering a deal between both parties during the extensive litigation. Judge Thomas Griesa’s judgement in NML Capital Ltd. et al v. Republic of Argentina called for equal treatment of holdout creditors and regular creditors, a landmark judgement that was based on the practical application of the pari-passu clause which was previously ignored in debt payment conflicts with sovereigns. Now that the inclusion and exclusion of ‘comma’ grants or denies a motion, the charm of Griesa’s unexpected ruling fades a little.

The application of pari-passu clause has put other heavily indebted countries on their guard. Italy, Europe’s second most indebted country, redid its bond agreements to reflect which circumstances grant equal treatment to bondholders and which did not. The longer the two parties in the Argentina debt conflict haggle in court, odds that Argentina will default on its debt commitments multiply.

Currently Argentina’s fate hangs in the balance as the 2nd circuit court makes its decision on Argentina’s appeal which would probably come out soon as holdout creditors have rejected Bueno Aires’ final offer. Argentina estimates NML Capital spent $48.7 million on its investment in 2008, and is offering to pay $126.6 million whereas NML Capital is looking at $720 million, as per the district court’s verdict. And this is why Argentina insists on calling holdout creditors vultures and financial pirates, among other things.