Intercreditor Distribution in Sovereign Debt Restructuring

27 Pages Posted: 9 Feb 2006

See all articles by Ousmène Jacques Mandeng

Ousmène Jacques Mandeng

International Monetary Fund (IMF) - Western Hemisphere Department

Date Written: September 2004

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: Aggregation problem, collective action, intercreditor equity, Paris Club

JEL Classification: F34, G15, H63

Suggested Citation

Mandeng, Ousmène Jacques, Intercreditor Distribution in Sovereign Debt Restructuring (September 2004). IMF Working Paper No. 04/183, Available at SSRN: https://ssrn.com/abstract=879008

Ousmène Jacques Mandeng (Contact Author)

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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