Part V Proposals to Reform Sovereign Debt Systems, 25 European Collective Action Clauses

2014 ◽  
Author(s):  
Billington David
Keyword(s):  
Collective Action ◽  
Sovereign Debt ◽  
Collective Action Clauses

Good Faith in Sovereign Debt Restructuring: Mapping a Shift from Enforcement to Voluntary Compliance

2007 ◽  
Vol 28 (2) ◽  
Author(s):  
Dania Thomas ◽  
Javier García-Fronti
Keyword(s):  
Collective Action ◽  
Sovereign Debt ◽  
Legal Rule ◽  
Good Faith ◽  
Fair Dealing ◽  
Voluntary Compliance ◽  
Debt Market ◽  
Specific Standard ◽  
Collective Action Clauses ◽  
The U.S

AbstractOur examination of changes in the period leading up to the Argentine debt exchange and after, reveals that with Collective Action Clauses (CACs), the sovereign debt market is increasingly reliant on good faith as a standard of fair dealing to ensure fair and orderly debt restructurings in the future. Unlike the entrenched, enforceable, doctrinal good faith in domestic jurisdictions such as the U.S., the norm relied on in the sovereign debt market is a contextual open norm similar to the notion of Treu und Glauben, section 242 BGB of the German civil code. It is not a legal rule with specific requirements that need to be fulfilled. This paper reveals that reliance on a contextual, open norm is evidence of a shift in the framework that regulates sovereign debt restructurings: a shift from enforcement to voluntary compliance. Further, we argue that in the absence of a multilateral, regulatory, framework that embeds good faith as a specific standard of fair dealing, this reliance will exacerbate not solve the problem of sovereign debt restructurings.

scholarly journals Restructuring Sovereign Debt

2003 ◽  
Vol 17 (4) ◽  
pp. 75-98 ◽  
Author(s):  
Barry Eichengreen
Keyword(s):  
Collective Action ◽  
Financial Markets ◽  
Empirical Evidence ◽  
Sovereign Debt ◽  
Emerging Market ◽  
International Community ◽  
Collective Action Clauses ◽  
Debt Crises ◽  
New Evidence ◽  
The Way

This paper provides new empirical evidence relevant to the debate over the desirability of reforms to the way that financial markets and the international community deal with sovereign debt crises. In particular, given the ongoing opposition of investors and some sovereigns to greater use of collective action clauses (CACs) in emerging market bonds, we present new evidence on the way that financial markets have priced the use or non-use of CACs.

Crisis Management and Resolution

2017 ◽  
Author(s):  
Yilmaz Akyüz
Keyword(s):  
Collective Action ◽  
Crisis Management ◽  
Emerging Economies ◽  
Public Debt ◽  
Financial Crises ◽  
Sovereign Debt ◽  
External Debt ◽  
Debt Restructuring ◽  
Domestic Debt ◽  
Collective Action Clauses

This chapter argues that the conventional approach to the management and resolution of external financial crises in emerging economies is inefficient and inequitable and needs to be reformed. Such reforms need to account for increased complexities arising from deepened integration, notably the difficulties in differentiating between external and domestic debt in terms of their holders, currency denomination, and governing laws. Effective debt resolution mechanisms would be needed to bail-in creditors whether the crisis is one of liquidity or solvency, or due to private or sovereign debt, or locally or internationally issued external debt, particularly since crises caused by excessive private borrowing lead to large increases in public debt. Debt workouts should include temporary standstills, protection against creditor litigation, lending into arrears and debt restructuring and combine statutory and voluntary elements, including collective action clauses, duly reformed to avoid the kind of predicaments encountered during the Argentinian restructuring.

A Taxonomy of Challenges to Sovereign Debt Restructurings

2018 ◽  
Author(s):  
Hayk Kupelyants
Keyword(s):  
Collective Action ◽  
Sovereign Debt ◽  
Good Faith ◽  
Debt Restructuring ◽  
Starting Point ◽  
Collective Action Clauses

Chapter 7 presents a taxonomy of challenges to the outcomes of sovereign debt restructuring, i.e. in what cases private creditors may argue that the restructurings was abusive, oppressive or otherwise invalid and has to be eviscerated accordingly. The starting point here is that the afflicted minority bondholder may challenge the abusive application of collective action clauses, at least in actions couched against the majority of bondholders that put the collective action clauses to use. The source of that power is the obligation of the majority to exercise its broad powers in good faith for the benefit of all bondholders and not to oppress minority bondholders. The chapter then proceeds to discuss the various iterations of this idea in respect of different collective action clauses.

Contractual Background of Sovereign Debt Litigation

2018 ◽  
Author(s):  
Hayk Kupelyants
Keyword(s):  
Collective Action ◽  
Sovereign Debt ◽  
The State ◽  
Binding Effect ◽  
Collective Action Clauses

Chapter 2 set out the panoply of collective action clauses found in sovereign debt documentation, and in particular majority action clauses which allow the majority of bondholders to modify the obligations of the State with binding effect on the minority of bondholders. Chapter 2 also examines other types of collective action clauses.

Progress Report on Inclusion of Enhanced Contractual Provisions in International Sovereign Bond Contracts

Policy Papers ◽  
2015 ◽  
Vol 15 (53) ◽  
Author(s):  
Keyword(s):  
Collective Action ◽  
Sovereign Debt ◽  
Progress Report ◽  
Executive Board ◽  
Sovereign Bond ◽  
Sovereign Bonds ◽  
Ongoing Work ◽  
Voting Procedures ◽  
Key Features ◽  
Collective Action Clauses

As part of the Fund’s ongoing work on sovereign debt restructuring, in October 2014 the Executive Board endorsed the inclusion of key features of enhanced pari passu provisions and collective action clauses (CACs) in new international sovereign bonds.1 Specifically, the Executive Board endorsed the use of: (i) a modified pari passu clause that explicitly excludes the obligation to effect ratable payments and (ii) an enhanced CAC with a menu of voting procedures, including a “single-limb” voting procedure that enables bonds to be restructured on the basis of a single vote across all affected instruments, a two-limb aggregated voting procedure and a series-by-series voting procedure.

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