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Part III Sovereign Debt Restructuring, 11 Litigation Aspects of Sovereign Debt

Rodrigo Olivares-Caminal, John Douglas, Randall Guynn, Alan Kornberg, Sarah Paterson, Dalvinder Singh

From: Debt Restructuring (2nd Edition)

Rodrigo Olivares-Caminal, Alan Kornberg, Sarah Paterson, John Douglas, Randall Guynn, Dalvinder Singh

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 04 March 2024

Bonds — Sovereign debt

This chapter starts the study of litigation aspects of a sovereign debt by looking at the effect of a disruption in the economy in terms of legal options for recovery. The chapter also looks at the pari passu clause in sovereign debt instruments. A pari passu clause is a standard clause included in public or private international unsecured debt obligations (syndicated loan agreements and bond issuances). From a close reading of the clause, it can be argued that it has two limbs: firstly, an internal limb, ie that the bonds will rank pari passu with each other; and, secondly, an external limb, ie that the bonds will rank pari passu with other unsecured (present or future) indebtedness of the issuer. Not all pari passu clauses are drafted in the same way, and they will vary according to the drafter. The chapter considers various relevant cases.

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