An Analysis Of Sovereign Debt Restructuring Options Under Legal Perspective

Since2008, after the outbreak of the financial crisis, Greece, Ireland, Portugal,Spain and other countries have debt crisis.the bailout of IMF and related countries torescue troubled debtors, and the facilitation of the debtor countries to restructure itsdebt led to a series of questions,therefore there is a intense discussion on how tosolve these problems. The focus of discussion is how to reduce the need of bailoutfunds, as well as which method should be adopted to sovereign debtrestructuring.This has prompted people to reflect on the sovereign debt restructuring,and this paper is a comparative analysis of the two kinds of the most importantinternational debt restructuring methods.The first method is the debtor and it’screditors negotiate in accordance with the collective action clauses to reach a debtrestructuring agreement, commonly known as “contract method”. The secondmethod is the debtor country and it’s creditors initiate the debt restructuringprocedures in accordance with international agreements widely known as statutorymethod.Finally Through the systematic comparative analysis, this paper attempts toprovide some countermeasures and suggestions for international society to solve acountry’s debt crisis by a swift and orderly restructuring.This paper has three chapters:the first chapter expounds the meaning ofsovereign debt, sovereign debt problem, sovereign debt crisis and sovereign debtrestructuring, as well as the necessity of a sovereign debt restructuring.The secondchapter mainly summarizes in two methods of sovereign debt restructuring, that iscollective action clauses and sovereign debt restructuring mechanism, and highlightsthe main content of the two methods.The third chapter is a comparative analysis of these two methods, firstly it introduced the similarities of the two, then focus oncomparing the difference between the two, specifically, on a comparison of theadvantages and disadvantages of the two methods to solve the problem of creditorsholdout and refinancing in sovereign debt restructuring process.In the end,weconclude that sovereign debt restructuring can not simply using any one of the twomethods, we should supplement collective action clauses with the sovereign debtrestructuring mechanism.