A No-Tribunal SDRM and the Means of Binding Creditors to the Terms of a Restructuring Plan

This paper addresses two discrete but related and essential attributes of an SDRM. It first considers an SDRM that would provide a procedure for proposing and adopting a restructuring plan for a sovereign debtor’s debt which would not involve any tribunal or administrator (a No-Tribunal SDRM). The paper examines the merits and feasibility of a No-Tribunal SDRM. In particular, the No-Tribunal SDRM proposed here would undertake the restructuring as if the sovereign debtor and its creditors were subject to the International Capital Markets Association Model Collective Action Clause regime. Second, this paper addresses the means by which a sovereign debt restructuring plan may become legally binding on a sovereign debtor’s creditors. It focuses on the various legal structures that could be employed to cause a sovereign debtor’s creditors to be legally bound by a restructuring plan – the implementation of a restructuring plan under an SDRM. This matter of binding creditors is an area of legal analysis that is somewhat underdeveloped and neglected in the literature. The paper addresses on implementation of a restructuring plan under a statutory approach – an SDRM imposed by rule of law. The manner of implementing an SDRM may be significant in several contexts, including the acceptability of the SDRM to political actors and market participants, the effectiveness of the operation of an SDRM, and the costs of devising and adopting an SDRM.