The ‘Great Game’ of Sovereign Debt Restructuring: Solving the Holdout Problem. A Critical Analysis of the Pari Passu and Collective Action Clauses in International Sovereign Bond Contracts.

This paper critically evaluates the law of sovereign debt restructuring pertaining to the regulation of creditor co-ordination and holdout creditors. More precisely, it provides a detailed examination and analysis of two important non-financial clauses in sovereign bond documentation: the ‘collective action clause’ (CAC) and the ‘pari passu clause’. It leads with one research question: does the pari passu clause and CAC adequately address the holdout problem and encourage the orderly restructuring of sovereign debt? It also provides independent judgment as how best to improve this area of law. Overall, this paper argues that the clauses, albeit not a panacea, both reflect an impressive collaborative effort between private and public sectors and mitigate holdout leverage