Intercreditor Equity in Sovereign Debt Restructuring

The book provides a comprehensive legal study of intercreditor equity—rules providing for equal and differential treatment of creditors—in sovereign debt restructurings. The question of intercreditor equity is one of the most conflictual issues in debt restructuring, both historically and today. It is paramount to creditors in the unfortunate event of a debt restructuring and it is equally important to debtor states so that they can manage restructuring processes as efficiently as possible and ensure a sustainable debt crisis resolution. The first aim of the book is to map and establish the content of intercreditor equity rules and analyse how they influence restructuring processes. This helps creditors improve their prediction of their legal rights and calculate the returns on their investments. It also improves a sovereign debtor’s understanding of the boundaries within which its debt restructuring offer must be designed and is instructive when drafting future sovereign debt instruments. Second, and equally important, the book sheds light on the functioning of the legal framework governing sovereign debt more broadly. It raises the question of whether intercreditor equity rules and the surrounding legal framework of sovereign debt restructuring are compatible with a debtor state’s possibility to ensure monetary and financial stability and establish sustainable debt burdens. In sum, the book seeks to go beyond the common platitude that ‘equal treatment’ is the crux of a successful debt restructuring process by showing that equal treatment is an ambiguous concept that is context- and rule-specific, and does not necessarily guarantee a sustainable debt restructuring.