1. 1 Transition to CACs: The Judge, the vultures and the future of creditor rights Marcus Miller University of Warwick, CSGR Dania Thomas Keele University, CSGR October 2006

2. 2 Questions To what extent did the US courts influence recent Argentine debt restructuring? How will judicial influence impact creditor rights in the future?

3. 3 Comparison of Recent Sovereign Settlements  (Porzecanski, 2005)  Argentina 2005 Ecuador 2000 Pakistan 1999 Russia 1998-2000 Ukraine 1998-2000 Uruguay 2003 Per Capita Income ($)* 11,5863,3631,8266,5923,8418,280 Scope ($ Billions) 81.86.80.631.83.35.4 Number of Bond Series 152533565 Jurisdictions 8 21136 Months in Default 38+1021839 Principal Forgiveness Yes NoYesNo ‘Haircut’ in Discount Bond (%) 66.340037.500 Participation Rate (% of Eligible) 769795989593  Adjusted for purchasing power, latest (2003) data for Argentina, otherwise data corresponds to year(s) of debt restructuring as noted Source: IIF,IMF, World Bank, A.C.Porzecanski’s calculations

4. 4 The Argentine debt resolution: overlapping influences

5. 5 Argentine litigation Engages the holdouts long enough to stimulate the settlement Then reins them in to ensure the settlement

6. 6 Judicial activism

7. 7 Judge-mediated debt restructuring

8. 8 Conclusions Stiglitz (2006) makes a similar point when he argues: “The fact that every advanced country has found it necessary to have a bankruptcy law reinforces the conclusions of economic theory, that collective action clauses will not suffice; some judicial process is required” It may be that, in theory, bonds with CACs can be restructured to ensure engagement and to secure aggregation: in practice it seems that the courts can do a great deal to help. This is why we look to a future with CACs and courts, aided by creditor committees and codes of conduct.