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The ‘Great Game’ of Sovereign Debt Restructuring: Solving the Holdout Problem. A Critical Analysis of the Pari Passu and Collective Action Clauses in International Sovereign Bond Contracts.

Akshay, S G; (2020) The ‘Great Game’ of Sovereign Debt Restructuring: Solving the Holdout Problem. A Critical Analysis of the Pari Passu and Collective Action Clauses in International Sovereign Bond Contracts. UCL Journal of Law and Jurisprudence , 9 , Article 2. 10.14324/111.2052-1871.125. Green open access

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Abstract

This paper critically evaluates the law of sovereign debt restructuring pertaining to the regulation of creditor co-ordination and holdout creditors. More precisely, it provides a detailed examination and analysis of two important non-financial clauses in sovereign bond documentation: the ‘collective action clause’ (CAC) and the ‘pari passu clause’. It leads with one research question: does the pari passu clause and CAC adequately address the holdout problem and encourage the orderly restructuring of sovereign debt? It also provides independent judgment as how best to improve this area of law. Overall, this paper argues that the clauses, albeit not a panacea, both reflect an impressive collaborative effort between private and public sectors and mitigate holdout leverage.

Type: Article
Title: The ‘Great Game’ of Sovereign Debt Restructuring: Solving the Holdout Problem. A Critical Analysis of the Pari Passu and Collective Action Clauses in International Sovereign Bond Contracts.
Open access status: An open access version is available from UCL Discovery
DOI: 10.14324/111.2052-1871.125
Publisher version: https://doi.org/10.14324/111.2052-1871.125
Language: English
Additional information: © 2020, The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License (CC BY) 4.0 https://creativecommons.org/licenses/by/4.0/, which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited.
Keywords: Sovereign Debt Restructuring, Collective Action Clause, Pari Passu Clause
URI: https://discovery.ucl.ac.uk/id/eprint/10106932
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