Intercreditor Equity Rules Applicable to Debt Instruments Governed by Domestic Law

Abstract

Chapter 4 examines intercreditor equity rules in domestic law. It also discusses which sovereign debt instruments are governed by domestic laws and the types of creditors that can hold such debt instruments. Section 4.2 examines the content and effects of the so-called pari passu clause. Section 4.3 discusses collective action clauses and exit consent. It also touches on potential minimum protection of minority creditors in debt restructurings implemented by majority voting procedures. Section 4.4 analyses special national legislation in Belgium, the United Kingdom, France, and in the Euro area, with the common aim of curbing certain rights of creditors who allegedly seek to free-ride on their co-creditors and thereby constitute an obstacle to debt crisis resolution (vulture fund legislation).