Restructuring

There is no international bankruptcy regime that governs sovereign default and restructuring. The process is ad hoc, driven by specific contractual provisions, and varies greatly across cases and over time.

This category of the blog relates to the main aspects of sovereign debt restructurings. Among other topics, we discuss:

• The circumstances that trigger restructurings – such as financial distress, liquidity dry-ups, political upheavals or strategic decision – and their timing, pre-emptive or post-default.
• How the burden is shared between the debtor country and its creditors: the size and form of debt relief, the role of debt sustainability analysis, and the contribution of IFIs in this process.
• How the burden is shared across creditors, within and across different categories – such as private vs official, members of the Paris Club vs other bilateral lenders, bond vs loan holders.
• The effectiveness of legal innovations such as collective action clauses (CACs) at ensuring a speedy and orderly process.