Bankruptcy Law Commons^™

Forward Contracts Preference Exception Broadly Construed, Brian King

Bankruptcy Research Library

(Excerpt)

Derivative transactions and financial contracts are a critical component of the United States economy. There are three main types of derivative contracts executed in our markets: futures, options and forward contracts. Each of these instruments derives value from an underlying security or resource with focus on a possible change in its future value. These instruments can be used as speculative investments, as hedges on securities already owned, or as a means of mitigating risk on volatility within a specific industry. An essential attribute of trading in these derivatives is “the ability of the parties to value their transaction on …

United States Sovereign Debt: A Thought Experiment On Default And Restructuring, Charles W. Mooney Jr.

All Faculty Scholarship

This chapter adopts the working assumption that it is conceivable that at some time in the future it would be in the interest of the United States to restructure its sovereign debt (i.e., to reduce the principal amount). It addresses in particular U.S. Treasury Securities. The chapter first provides an overview of the intermediated, tiered holding system for book-entry Treasuries. For the first time the chapter then explores whether and how—logistically and legally—such a restructuring could be effected. It posits the sort of dire scenario that might make such a restructuring advantageous. It then outlines a novel scheme …