Sovereign Debt Restructuring: The Judge, The Vultures And Creditor Rights

What role did the US courts play in the Argentine debt swap of 2005? What implications does this have for the future of creditor rights in sovereign bond markets? The judge in the Argentine case has, it appears, deftly exploited creditor heterogeneity - between holdouts seeking capital gains and institutional investors wanting a settlement - to promote a swap with a supermajority of creditors. The analysis of Argentine debt litigation reveals a 'Judge-mediated' sovereign debt restructuring, which resolves the key issues of Transition and Aggregation - two of the tasks envisaged for the IMF's still-born Sovereign Debt Restructuring Mechanism.