Complicated, ambiguous, a Heath Robinson machine of sovereign debt payment. Those are all good ways to describe the likely legal strategies that are now open to Argentina, if it proposes to go on freezing out holdouts but continue paying out on restructured foreign-law debt. That's after last Friday's landmark US Court of Appeals decision. But in a sense, one simple strategy has always been open to the Argentine government: reaching a settlement with the holdouts. OK, two, counting a hard default on everyone, but let's not dwell on that. Holdouts would get paid (hopefully, from the Argentine perspective, not in full), and Argentina would be free of the litigation, the expense, and the lost access to international markets which have burdened it for a decade. It could happen. And pigs could fly past the windows of the Casa Rosada. Only on Thursday was President Cristina Fernández de Kirchner accusing "vulture funds" of waging a campaign against Argentina (while also insisting that its dollar debt will be paid back in dollars). But there might be another, more interesting obstacle to a quick holdout settlement. Here's one of the clever parts of the original prospectus for Argentina's 2005 debt exchange: Under the terms of the Pars, Discounts and Quasi-pars, if following the expiration of the Offer until December 31, 2014, Argentina voluntarily makes an offer to purchase or exchange or solicits consents to amend any Eligible Securities not tendered or accepted pursuant to the Offer, Argentina has agreed that it will take all steps necessary so that each holder of Pars, Discounts or Quasipars will have the right, for a period of at least 30 calendar days following the announcement of such offer, to exchange any of such holder's Pars, Discounts or Quasi-pars for the consideration in cash or in kind received in connection with such purchase or exchange offer or securities having terms substantially the same as those resulting from such amendment process, in each case in accordance with the terms and conditions of such purchases, exchange offer or amendment process... It's a clause essentially allowing any bondholder that did agree to the restructuring to also receive upside from any subsequent exchange, or buyback, of leftover bonds. But there's also this in the prospectus: Argentina reserves the right, in its absolute discretion, to purchase, exchange, offer to purchase or exchange, or enter into a settlement in respect of any Eligible Securities that are not exchanged pursuant to the Offer (in accordance with their respective terms) and, to the extent permitted by applicable law, purchase or offer to purchase Eligible Securities in the open market, in privately negotiated transactions or otherwise. Any such purchase, exchange, offer to purchase or exchange or settlement will be made in accordance with applicable law. The terms of any such purchases, exchanges, offers or settlements could differ from the terms of the Offer. Holders of New Securities will be entitled to participate in any voluntary purchase, exchange, offer to purchase or exchange extended to or agreed with holders of Eligible Securities not exchanged pursuant to the Offer as described below under ""Description of the New Securities - Rights Upon Future Offers." Re-read that last sentence. As Rodrigo Olivares-Caminal points out - the word "settlement" is dropped after "purchase" or "exchange." That implies freedom for Argentina to negotiate a settlement with future holdouts, contrasting with the overall gist of the clause (to privilege those who bit the bullet and earlier exchanged their bonds). Those who exchanged could not piggyback on this future settlement. That's partly why Argentina's parliament subsequently passed the (in) famous "Padlock Law" (Ley de Cerrojo) - an Ulysses pact of sorts which forbade future governments from negotiating even a settlement with holdouts. Holders of restructured Argentine debt were back in business as the country's "most favoured" creditors. Unfortunately for Argentina, Elliott Associates had also been provided with a smoking gun to present to courts for its claims of unfair subordination and violation of the pari passu clause. That became clear in Judge Griesa's September 2011 hearing ("there's simply no doubt at all that what the Republic has done is to violate the pari passu clause, no matter what interpretation"), and the nail was driven in further by last Friday's Court of Appeals decision. Of course, there's much more hidden in the relationship between the Padlock Law, the pari passu clause as interpreted and argued over in the Argentine dispute, and the actual (or "original") meaning of pari passu. You can read more in this 2008 article by Olivares-Caminal, and we'd also recommend looking out for Mitu Gulati and Robert Scott's new book on the history of pari passu and sovereign debt, which is out in a few weeks. But for now, you might be able to see where this is going. If the Argentine government does (eventually) decide to settle with los fondos buitres, it could either suspend the Padlock Law (to make any separate settlement possible), or make the settlement's terms available to the restructured bondholders, as Olivares-Caminal argues. A repeal of the lock law in these circumstances - it's also a reversal which wouldn't be politically easy to execute, we'd imagine - could also invite fresh litigation from holders of the restructured paper, he adds. Once again, it looks like another complicated legacy of a decade spent resisting holdouts à l'outrance. The government lowered the voting age to 16 years this week. Beneficiaries of that decision were four years old at the time of the default that led to all this.