The role of distressed debt funds, which was also known as “vulture funds” in the sovereign debt restructuring a hotly debated topic, especially after the success of Elliot Associates in conversion of a $ 11 million investment in Peruvian bonds worth of $ 21 million in a $ 58 million cash payment from the country that the full face value of the bonds and interest overdue. Highlights the problems associated with rescheduling coordination. On the one hand, many observers scoffed companies such as Ell … Read more »

The role of distressed debt funds, which was also known as “vulture funds” in the sovereign debt restructuring a hotly debated topic, especially after the success of Elliot Associates in conversion of a $ 11 million investment in Peruvian bonds worth of $ 21 million in a $ 58 million cash payment from the country that the full face value of the bonds and interest overdue. Highlights the problems associated with rescheduling coordination. On the one hand, ridiculed many observers Companies like Elliot and darts as a “vulture” or “rouge creditors’ suffering on restructuring sovereign debt at the expense of countries take place searched benefit economic hardship and the majority of bondholders whose cooperation allowed the restructuring. Critics believed that these objectors creditors’ collective action problems “and presented a major obstacle to a successful restructuring sovereign debt crisis. On the other hand, argued that other observers activist investors actually improved the overall market by demonstrating the enforceability of contracts. In fact, they argued that the creditors too many hurdles faced during the uprising against the country after receiving favorable judgments in support of claims.
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from
Laura Alfaro,
Ingrid Vogel
Source: Harvard Business School
25 pages.
Release Date: 09 June, 2006. Prod #: 706 057 PDF-ENG
Creditor Activism in Sovereign Debt: “Vulture” Tactics or Market Backbone HBR case solution

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