White & Case LLP Partner Ian Clark and Associate Dimitrios Lyratzakis (both London Capital Markets) authored an article titled "Towards a More Robust Sovereign Debt Restructuring Architecture: Innovations from Ecuador and Argentina" that was published in the January issue of the Capital Markets Law Journal (Oxford University Press).
Ian and Dimitrios were part of the White & Case team that advised the largest bondholder groups in the sovereign debt restructurings of Argentina and Ecuador, which each settled in September 2020. In the article, they discuss in detail the contractual innovations to the ICMA Collective Action Clauses (CACs) that the bondholder groups negotiated with Ecuador and Argentina as part of the respective debt restructurings.
The authors conclude that the negotiated contractual refinements adopted by Ecuador and Argentina enhance the ICMA sovereign debt restructuring architecture. On the one hand, they rectify certain deficiencies in the drafting of the ICMA CACs that could jeopardize the purpose of the clauses. On the other, they provide strong incentives for a sovereign to engage with its private creditors in a constructive, consensus-building process that results in restructuring proposals capable of achieving supermajority creditor support.
The article appears in Capital Markets Law Journal, Volume 16, Issue 1, January 2021, Pages 31–44 and can be accessed on the Capital Markets Law Journal page.
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