seuss,
NGF certainly think they have a say in it (and have stated so publicly). As we have not seen the actual agreement, we couldn't know.
What can be said, however, is that the law wouldn't normally allow a "Heads I win, tails you lose" bet. That is, under a hedge agreement each side must be in a position to meet their side of the transaction. A party, like LBCC, which has failed does not have the capacity to meet its obligation to by physical from NGF. It's that simple. That's why NGF aren't providing them with any gold - they couldn't pay for it.
A court would not require NGF to pay an amount to LBCC, representing the amount for which LBCC could take NGF's physical and sell it into the market at a profit. Given that LBCC could not actually buy the physical, nor could it pay NGF any shortfall in the event that gold traded below $875/oz. In a contract such as this, both parties have performance obligations and if one party cannot perform because they are insolvent, a court wouldn't require the other party to perform, IMO.
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