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Clauses & Controversies
Ep 148 ft. Mitu & Mark
Jan 6, 2025
Dive into the complexities of Sri Lanka's new Most Favored Creditor clause and its unexpected consequences for creditors. The discussion covers the intriguing intersection of tort law and sovereign debt, revealing how tortious interference can complicate restructuring efforts. Discover the amusingly dubbed 'funny clause' and the challenges it presents to bondholders regarding legal interpretations. Legal intricacies and historical comparisons highlight the evolving landscape of creditor rights, making for a captivating conversation that balances humor with serious legal analysis.
49:49
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Quick takeaways
- Sri Lanka's Most Favored Creditor clause represents a significant departure from traditional creditor agreements, raising legal and ethical concerns.
- The complexities of tortious interference in sovereign debt highlight the uncertain ramifications for both participating and non-participating creditors during restructuring.
Deep dives
Most Favored Creditor Clause Overview
The most favored creditor clause in Sri Lanka's debt restructuring introduces a significant shift in how creditor agreements are typically structured. Traditionally, these clauses provide that creditors involved in a restructuring will not be offered better terms than those who participate, unless their own terms are similarly matched. However, the Sri Lankan clause appears to set a more aggressive standard, explicitly stating that the government will not offer any holdout creditors terms equivalent to or better than those presented to restructuring participants. This clause is controversial as it navigates the legal complexities of tortious interference, potentially putting the government at risk of legal challenges from non-participating creditors.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode