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Sovereign debt restructuring: the Judge, the vultures and creditor rights

Marcus Miller () and Dania Thomas
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Dania Thomas: CSGR, University of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: What role did the US courts play in the Argentine debt swap of 2005? What implications does this have for the future of creditor rights in sovereign bond markets? The judge in the Argentine case has, it appears, deftly exploited creditor heterogeneity – between holdouts seeking capital gains and institutional investors wanting a settlement – to promote a swap with a supermajority of creditors. Our analysis of Argentine debt litigation reveals a ‘judge-mediated’ sovereign debt restructuring, which resolves the key issues of Transition and Aggregation - two of the tasks envisaged for the IMF’s still-born Sovereign Debt Restructuring Mechanism. For the future, we discuss how judge-mediated sovereign debt restructuring (together with creditor committees) could complement the alternative promoted by the US Treasury, namely collective action clauses in sovereign bond contracts

Keywords: Sovereign debt crises; debt restructuring; holdout creditors; collective action clauses (search for similar items in EconPapers)
JEL-codes: F34 K41 K49 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk and nep-law
Date: 2006
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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2006/twerp_757.pdf

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Journal Article: Sovereign Debt Restructuring: The Judge, the Vultures and Creditor Rights (2007) Downloads
Working Paper: Sovereign debt restructuring: the Judge, the vultures and creditor rights (2006) Downloads
Working Paper: Sovereign Debt Restructuring: the Judge, the Vultures and Creditor Rights (2006) Downloads
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