To Formalize or Not to Formalize: Creditor-Debtor Engagement in Sovereign Debt Restructurings

25 Pages Posted: 6 Jul 2018

See all articles by Michael Waibel

Michael Waibel

University of Vienna - Faculty of Law

Date Written: July 1, 2018

Abstract

Creditor-debtor engagement in one form or another has been a feature of many sovereign debt restructurings. In some cases, debtor-creditor engagement has been formalized and took the specific form of creditor committees. Views differ considerably on the merits and demerits of CCs, and on the level of prescription and detail that is desirable from a policy perspective. The incentives of the main actors in sovereign debt also differ with respect to creditor engagement, particularly as regards ex ante contractual clauses. The article focuses on the possible content of creditor-debtor engagement. Creditor-debtor engagement can take four main forms: (i) the insertion ex ante of contractual clauses in bond documentation for creditor committees (CCs); (ii) ex ante best practices for formal creditor committees; (iii) ex ante best practices for engagement between creditors and debtors or (iv) ex post agreement between the debtor and creditor on creditor engagement or CCs.

Keywords: creditor, debtor, Creditor-debtor Engagement, sovereign debt, bonds, loans

Suggested Citation

Waibel, Michael, To Formalize or Not to Formalize: Creditor-Debtor Engagement in Sovereign Debt Restructurings (July 1, 2018). University of Cambridge Faculty of Law Research Paper No. 46/2018. Available at SSRN: https://ssrn.com/abstract=3209258 or http://dx.doi.org/10.2139/ssrn.3209258

Michael Waibel (Contact Author)

University of Vienna - Faculty of Law ( email )

Schottenbastei 10-16
Vienna, A-1010
Austria

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