Intercreditor Distribution in Sovereign Debt Restructuring

September 1, 2004

Preview Citation

Format: Chicago

Ousmene J Mandeng. Intercreditor Distribution in Sovereign Debt Restructuring, (USA: International Monetary Fund, 2004) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Asset and liability management, Currencies, Debt restructuring, Discount rates, Financial institutions, Financial services, Money, Sovereign debt restructuring, Stocks

Keywords: Aggregation problem, Cash flow, Cash-flow relief, Collective action, Currencies, Debt, Debt contract, Debt issue, Debt restructuring, Discount rates, Intercreditor equity, Paris Club, Present value, Present value terms, Restructuring agreement, Restructuring proceeding, Sovereign debt restructuring, Stocks, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/183
Stock No:

WPIEA1832004
ISBN:

9781451859348
ISSN:

1018-5941

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