International Chapter 11 Bankruptcy, Seriously?

Derek Hunter

About as serious as a UN resolution that the United States voted against, but an important step nonetheless. On August 28th, the UN General Assembly passed a resolution that calls on member nations to engage in multilateral negotiations with the aim of establishing a comprehensive legal framework to provide a fair and efficient sovereign restructuring process. The impetus for this resolution is clear: Argentina’s second debt default in a little over a decade, which again demonstrated how a few obstinate U.S.-based hedge funds can drive an entire nation into default.

The ideas embodied in the resolution are not entirely new and are sometimes referred to as “Sovereign Chapter 11,” which the BBC discussed last week.