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Toward a Statutory Approach to Sovereign Debt Restructuring

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  • Patrick Bolton

Abstract

This paper provides an overview of key elements of Corporate Bankruptcy Codes and Practice around the world that are relevant to the debate on Sovereign Debt Restructuring. It highlights four components common to most bankruptcy reorganization institutions: a stay on debt collection efforts to prevent a costly run for the assets, broad enforcement of absolute priority, majority voting among creditors on the proposed reorganization plan, and new higher priority financing to keep the firm going while its liabilities are restructured. The paper argues that these components ought to be present in any sovereign debt restructuring procedure.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/13.

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Length: 37
Date of creation: 01 Jan 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/13

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Keywords: Bankruptcy; Sovereign debt; Debt restructuring; Sovereign Debt Restructuring Mechanism; debt; restructuring; creditors; sovereign debt restructuring; corporate bankruptcy; bankruptcy reorganization; creditor; bankruptcy law; debts; payments; bailouts; corporate debt; debt crises; debtors; bankruptcy procedures; receivership; debt crisis; debtor countries; debt restructuring procedure; debt collection; interest; insolvency; debt reduction; debtor country; debt renegotiations; liabilities; bankruptcy legislation; debt renegotiation; debt contracts; sovereign bond; bankruptcy courts; sovereign debtors; sovereign debt crisis; debt structures; repayments; liquidity crises; debt problems; debt obligations; sovereign bonds; debt burden; international debt; bankruptcy reform; bond markets; bankruptcy laws; sovereign debt crises; loans; debt forgiveness; debt sustainability; government bailouts; debt reductions; private debt; obligations; sovereign debtor; unsecured debt; balance of payments; bond market; debt relief; market debt; repayment; central bank; sovereign borrowers; taxes; borrowing costs; solvency; international lending; bond restructuring; debt exchanges; sovereign debts; sovereign borrower; personal bankruptcy; sovereign defaults; debt holders; outstanding debt; corporate bonds; bank loans; defaults; bond prices;

References

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  1. Barry Eichengreen & Christof Ruehl, 2000. "The Bail-In Problem: Systematic Goals, Ad Hoc Means," NBER Working Papers 7653, National Bureau of Economic Research, Inc.
  2. Gertner, Robert & Scharfstein, David, 1991. " A Theory of Workouts and the Effects of Reorganization Law," Journal of Finance, American Finance Association, American Finance Association, vol. 46(4), pages 1189-1222, September.
  3. Michael P. Dooley, 2000. "Can Output Losses Following International Financial Crises be Avoided?," NBER Working Papers 7531, National Bureau of Economic Research, Inc.
  4. Peter B. Kenen, 2001. "International Financial Architecture: What's New? What's Missing?, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 335, July.
  5. Detragiache, Enrica & Garella, Paolo G., 1996. "Debt Restructuring with Multiple Creditors and the Role of Exchange Offers," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 5(3), pages 305-336, July.
  6. Ian Domowitz & Elie Tamer, . "Two Hundred Years of Bankruptcy: A Tale of Legislation and Economic Fluctuations," IPR working papers, Institute for Policy Resarch at Northwestern University 97-25, Institute for Policy Resarch at Northwestern University.
  7. Buiter, Willem H & Sibert, Anne, 1999. "UDROP: A Small Contribution to the New International Financial Architecture," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2138, C.E.P.R. Discussion Papers.
  8. Franks, Julian R & Torous, Walter N, 1989. " An Empirical Investigation of U.S. Firms in Reorganization," Journal of Finance, American Finance Association, American Finance Association, vol. 44(3), pages 747-69, July.
  9. Jeremy Bulow, 2002. "First World Governments and Third World Debt: A Bankruptcy Court for Sovereign Lending?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 229-256.
  10. W.H. Buiter & A Sibert, 1999. "UDROP: A Small Contribution to the International Financial Architecture," CEP Discussion Papers, Centre for Economic Performance, LSE dp0425, Centre for Economic Performance, LSE.
  11. Buiter, Willem H & Sibert, Anne C, 1999. "UDROP: A Contribution to the New International Financial Architecture," International Finance, Wiley Blackwell, Wiley Blackwell, vol. 2(2), pages 227-47, July.
  12. Aghion, P. & Hart, O. & Moore, J., 1992. "The Economics of Bankruptcy Reform," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 92-11, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Olivier Jeanne & Jeromin Zettelmeyer, 2001. "International bailouts, moral hazard and conditionality," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 16(33), pages 407-432, October.
  14. Törbjörn I. Becker & Anthony J. Richards & Yunyong Thaicharoen, 2001. "Bond Restructuring and Moral Hazard," IMF Working Papers 01/92, International Monetary Fund.
  15. Rowat, M. & Astigarraga, J., 1999. "Latin American Insolvency Systems. A Comparative Assessment," Papers, World Bank - Technical Papers 433, World Bank - Technical Papers.
  16. Hal S. Scott, 2002. "How Would a New Bankruptcy Regime Help?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 334-340.
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Citations

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Cited by:
  1. Xavier Vives, 2006. "Banking and Regulation in Emerging Markets: The Role of External Discipline," World Bank Research Observer, World Bank Group, World Bank Group, vol. 21(2), pages 179-206.
  2. Marc Flandreau, 2013. "Sovereign states, bondholders committees, and the London Stock Exchange in the nineteenth century (1827–68): new facts and old fictions," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 29(4), pages 668-696, WINTER.
  3. Leszek Balcerowicz, 2010. "Sovereign Bankruptcy in the European Union in the Comparative Perspective," Working Paper Series, Peterson Institute for International Economics WP10-18, Peterson Institute for International Economics.

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