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Structuring And Restructuring Sovereign Debt: The Role Of Seniority, Patrick Bolton, Olivier Jeanne
Structuring And Restructuring Sovereign Debt: The Role Of Seniority, Patrick Bolton, Olivier Jeanne
Center for Contract and Economic Organization
In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show, however, that competition for repayment between lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring.
Odious Debts Or Odious Regimes?, Patrick Bolton, David Skeel
Odious Debts Or Odious Regimes?, Patrick Bolton, David Skeel
Center for Contract and Economic Organization
Odious regimes have always been with us. That there is no silver-bullet solution that will prevent odious regimes from arising, or stymie them once they do, is evident from the plethora of responses employed by the international community once a regime’s odiousness becomes clear. Trade sanctions may be used to try to choke off a malignant regime’s access to weapons or other goods. In egregious cases, such as Milosevic’s Serbian regime, the international community may take military action. Still another strategy, more talked about than implemented, is the one considered in this article: the use of the odious debt (or, …