Clauses & Controversies Ep 148 ft. Mitu & Mark
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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.
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Sri Lanka's Novel MFC Clause
- The Most Favored Creditor (MFC) clause in Sri Lanka's restructuring looks different from previous versions.
- It seems to simultaneously invite settlements with holdouts while aggressively trying to prevent them.
Traditional MFC Clauses
- Past MFC clauses typically stated that better terms offered to holdouts must also be given to restructuring participants.
- This allowed issuers to settle with holdouts without formally breaching contracts with restructuring creditors.
Tortious Interference and MFC Clauses
- Tortious interference with contracts is a relevant legal doctrine in sovereign debt restructuring.
- It requires proving the intentional procurement of a breach, which is difficult but potentially applicable to MFC clauses.