Andrew Wilkinson, an expert in sovereign debt restructurings, discusses the risks of liability in creditor complaints, the use of tortious interference with contract in the Zambia debt restructuring, and the importance of fair treatment for all stakeholders in restructuring deals. He shares insights on the complexities of navigating bankruptcy law, managing creditor negotiations, and achieving successful outcomes in financial restructurings.
In sovereign debt restructurings, conflicts arise over the treatment of creditors, leading to potential liability risks, including invoking tortious interference with contracts.
Achieving fair comparability treatment in negotiations between official and commercial creditors in sovereign debt restructurings is complex, emphasizing the need for flexibility and the avoidance of litigation to advance restructuring.
Deep dives
Background and Transition to Sovereign Deals
Andrew Wilkinson, a UK-based restructuring lawyer, shares his journey from a London firm to a US firm, highlighting his transition to restructuring and bankruptcy law, influenced by experiences in New York. Engaging in the Ukraine debt restructuring in 2015 marked his pivot to sovereign deals. The shift from corporate to sovereign work provided Wilkinson with demanding and high-profile cases under English law, aligning with the rise of sovereign debt restructurings.
Challenges in Comparing Commercial and Sovereign Debt Restructuring
Wilkinson discusses challenges in comparing concessions between official and commercial creditors in sovereign deals, emphasizing the complexities in achieving fair comparability treatment. He highlights the fundamental tension between different types of creditors and the need for flexibility in negotiations. Wilkinson stresses the importance of fairness and flexibility, cautioning against litigation as a means to advance restructuring.
Process Issues and Collaboration Between Official and Private Creditors
Addressing process issues in negotiations, Wilkinson underlines the necessity for choreographed dealings to align official and private creditors' interests in sovereign debt restructurings. He proposes a two-phase approach where the sovereign brokers a deal with bondholders first before engaging with official creditors. Transparency, flexibility, and a collaborative agreement process emerge as key factors for successful restructuring.
Future of Restructurings and Transparency
Wilkinson concludes by envisioning streamlined restructurings with improved collaboration between official and private creditors. He advocates for transparency in outlining deals with official creditors to avoid ambiguity and delays. By emphasizing fairness, flexibility, and open communication, Wilkinson anticipates smoother and more efficient sovereign debt restructuring processes in the future.
Tortious Interference and Inter-Creditor Duties
Creditors in sovereign debt restructurings often complain about other creditors. And creditors often try to limit what other creditors get (at least indirectly, via most favored nations clauses, comparability of treatment, etc.). Can these efforts sometimes create a risk of liability? Does that risk even extend to official creditors? In the recent Zambian restructuring negotiations, rumor has it that the doctrine of tortious interference with contract was invoked when commercial creditors felt that official creditors were expecting them to make unrealistic sacrifices. Andrew Wilkinson (Weil, which advised the Zambia External Bondholder Steering Committee) joins us to talk about the restructuring of Zambia's debt and the question of inter-creditor duties.
Producer: Leanna Doty
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