Intercreditor Distribution in Sovereign Debt Restructuring

Ousmene Mandeng

No 2004/183, IMF Working Papers from International Monetary Fund

Abstract: Intercreditor equity represents one of the main objectives of bankruptcy proceedings. Yet, recent restructurings of sovereign debt suggest that violation of intercreditor equity is common. While existing contractual provisions, and guidelines issued by creditor committees, establish fundamental principles about creditor treatment, they seem to remain too vague to guide debt restructuring processes effectively. The paper focuses on distribution, and argues that lack of clear guidelines for distribution may complicate and delay the resolution process and induce undue uncertainty about the predictability and viability of the restructuring outcome. The paper discusses and proposes parameters which may contribute to establishing explicit principles for the assessment of intercreditor equity in distribution.

Keywords: WP; debt; present value; cash flow; restructuring proceeding; Aggregation problem; collective action; intercreditor equity; Paris Club; restructuring agreement; debt contract; present value terms; debt issue; cash-flow relief; Sovereign debt restructuring; Debt restructuring; Discount rates; Currencies; Stocks (search for similar items in EconPapers)
Pages: 27
Date: 2004-09-01
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Citations: View citations in EconPapers (8)

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