Environmental Protection and Sovereign Debt Restructuring

Some countries have a compelling argument for why they should not be expected to join the planetary effort to fight climate change. These are countries facing the need to restructure their external debt. By definition, sovereigns that cannot pay what they are already contractually obligated to pay will not have excess cash to devote to environmental conservation or other measures to assist with limiting climate change. As incongruous as it may sound, however, it is precisely this subset of countries undergoing a debt restructuring that may have an alternative avenue for funding these projects.

Background

Most modern sovereign debt restructurings … Read more

Sovereign Debt Restructuring: The Battle of Argentina Is Over. The Battle of Venezuela Is About to Begin.

Most of the lawsuits against Argentina in the New York courts ended in the Spring of 2016 through cash settlements with the major litigants.  The market is still digesting the lessons from this 15 years of bitter litigation.  That assessment may eventually conclude that

  • playing the part of a death-grip holdout in a sovereign debt restructuring will probably pay off handsomely,
  • obtaining a court injunction (a so-called pari passu injunction) preventing the sovereign borrower from paying its other external debt without making a “ratable” payment to holdouts is an essential element to a winning holdout strategy, and
  • creditors prepared

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