Coherent Identifier About this item: 20.500.12592/6f9tj3

HOW NEW YORK CAN STOP VULTURE FUNDS FROM PREYING ON COUNTRIES

14 December 2021

Summary

While creditors can choose to negotiate, there is nothing compelling them to cooperate in good faith during debt restructurings.15 As a result of this loophole in the law, a favorite vulture fund tactic is to “hold out” during debt negotiations, even when they own a small percentage of a country’s debt and the rest of the creditors are willing to negotiate in good faith. [...] In turn, countries in economic distress are at the whim of predatory creditors.18 The Vulture Playbook in Practice: • In the case of Peru, out of approximately 180 creditors, only Elliott Capital and Pravin Banker refused to participate in a negotiated restructuring agreement.19 • During negotiations with Argentina, Elliott Capital and other hedge funds refused the proposed restructuring deal—even. [...] The Republic of Congo eventually settled with Kensington, “for an undisclosed amount,” in 2007.44 • In the neighboring Democratic Republic of Congo (also called Congo-Kinshasa), the New York-based FG Capital Management took the DRC to court and attempted to seize the country’s assets in the Bahamas, Europe, South Africa, the US, and Hong Kong. [...] The Board has enabled hedge funds to exert undue control over the process and has largely turned a blind eye to allegations of wrongdoing that could get in the way of hedge fund profits.49 Only 5% of debt restructurings involved lawsuits in the 1980’s. [...] • Tried to seize two contracts between Argentina and SpaceX for satellite launches.53 • Convinced the government of Ghana to seize an Argentinian naval training warship stationed off the coast of Ghana, despite being worth a fraction of what the hedge fund claimed it was owed.54 The International Tribunal of the Law of the Sea eventually invalidated Singer’s court order.55 • The government of Arge.

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