Mitigating the Problem of Vulture Holdout : International Certification Boards for Sovereign Debt Restructurings

The Great Recession has brought greater sovereign debt defaults, which in turn have brought a surfeit of academic explorations and policy discussions of sovereign debt restructuring. The purpose of this article is to offer yet one more idea for the hopper of what to do with the seemingly intractable problem of restructuring sovereign bond debt. The field does not lack for statutory and contractual proposals, from SDRM to CACs, but it is not yet sufficiently saturated that another proposal cannot join the mix. The proposal is for the establishment of international certification boards that can give a stamp of approval to workout proposals for bond debt that is (at least in part) privately held. The reason for the boards is to combat the problem of holdouts in an age of vulture funds and other new-age sovereign debt investors. The boards are deliberately non-judicial and will have no hard law power by design. Nonetheless, it is suggested that these boards will have an incremental effect in coalescing agreement around sovereign debt restructuring proposals