Part III Sovereign Debt Restructuring, 12 Transactional Aspects of Sovereign Debt Restructuring

Abstract

Chapter 12 provides an overview of the transactional aspects of sovereign debt restructuring, looking at the procedures and methods to conduct a successful restructuring, addressing this from the perspective of borrowers/debtors and lenders/creditors. This chapter looks at both (1) policy approaches towards conducting a debt restructuring (ie, the theoretical Sovereign Debt Restructuring Mechanism (SDRM), the use of the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) in the Greek restructuring, and the more novel Debt Service Suspension Initiative (DSSI) and the Common Framework developed to tackle the distress situations resulting from the COVID-19 pandemic) and (2) the transactional aspects, the imbedded clauses that can facilitate a restructuring (ie the industry-wide collective action clauses (CACs) and the recent challenges posed to them by re-designation and the Pac-man technique) as well as the fallback option of voluntary exchange offers combined with contractual sweeteners and exit consents.