The definition of Indebtedness and the consequent imperilling of the Pari Passu, Negative Pledge and Cross-Default Clauses in sovereign debt instruments
164 - 179 (15)
Capital Markets Law Journal
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Sovereign debt crises are unavoidable, they occur and more often than expected.1 Recent events have also demonstrated that these crises, which were historically associated only with developing countries can now affect developed countries (and/or their political subdivisions) as well, making no distinctions.2 Testament of this evolutionary mutation has been the recent EU sovereign debt crisis3 and the ongoing crisis in Puerto Rico.4 Therefore, the role of contractual terms in sovereign debt instruments is of great importance in the event of having to enforce creditors’ rights. The international community has recently been occupied trying to find solutions to prevent these crises in the first place and, how to deal with them once they have taken place. If a crisis cannot be avoided, dealing with non-performing outstanding obligations presents greater challenges due to the lack of an international legal framework to deal with a universe of claims from different types of creditors.
- Applied Economics