Ukraine's financial position is worsening, restructuring seems likely, and the big question is what to do about the $3 billion loan Victor Yanukovych saddled the country with before fleeing. Coverage of the loan here and here on Credit Slips, and bonus coverage on FT Alphaville (free registration required). Though a government-to-government loan in substance, the loan is disguised as an ordinary eurobond issue, with contract terms that give Russia extraordinary leverage. These include the right to accelerate early, trigger cross-default, and block or impede restructuring. That may be why recent reports suggest the plan is to pay Russia in full when the bonds mature in December 2015, though I can't imagine either Ukraine or its official lenders are thrilled at the prospect.
Perhaps there are other options. The academic literature on sovereign debt often discounts the relevance of law and legal institutions, although Mitu Gulati and I argue here that this may be a mistake. Ukraine's case may illustrate the point. The country's leverage - what little it has - depends in part on whether it can place meaningful legal barriers in the way of any effort to enforce the bonds. That would likely involve English law and courts (see par. 16, page 35 of the prospectus). Below the jump, I discuss two possibilities. The first is a proposal by Anna Gelpern described in detail in this paper (which also has good background on the loan) and this blog post. The second is a brief but tantalizing proposal by Joseph Blocher and Mitu Gulati in the final section of this paper. In short, Anna proposes legislation making the debt unenforceable in English courts. Joseph and Mitu suggest that Ukraine is entitled to compensation for Russia's annexation of Crimea and can use this claim as a set-off against the debt. Both proposals raise unique challenges and questions.
Continue reading "Legal Options for Ukraine's Russian Debt Problem" »
Our friend and co-blogger, Jean Braucher, passed away a week ago today. Our first post here on Credit Slips had only a few paragraphs about her contributions to our professional community. There was a lot more to say about Jean.
Since that time, a number of comments have made their way into my inbox or were posted on to that original post. The comments have come from practicing attorneys, academics, judges, and journalists and from all over the United States as well as Europe, Australia, and South America. If you sent me a longer comment, I hope I have done justice to it below in excerpting it, and my apologies if I mistakenly omitted some. Here is what people wrote about Jean.
Continue reading "Tributes to Jean" »
We are making a few changes in the author line-up here at Credit Slips. The blog has been running for seven and a half years. During that time, new voices have entered the academy, and we need to keep up!
Continue reading "Some Changes at the Slips" »
Credit Slips now has a Twitter feed. You can find us @CreditSlips on Twitter (as well as from the button to the right). We'll be trying to put our posts up there as well as retweeting from the Credit Slips authors. We also have added a button that will allow you to tweet individual Credit Slips posts on your own Twitter feed.
So, I just discovered that the Credit Slips feed to Facebook has been inactive for two months. I think I have fixed it. As the one with all the virtual keys to the machines, my experience when looking at the web site is not always the same as everyone else's. And, this blog is something we all do in our spare time. If something stops working or you have other suggestions, feel welcome to shoot me an e-mail or leave a comment. It will be a help.
The many interesting comments left by our informed readership help make Credit Slips one of the best places on the Internet for informed discussion about debt and bankruptcy issues. The many spam comments make Credit Slips a less useful resource.
Continue reading "Comments, Spam, Loyal Readers, and False Positives" »
It seemed time to catch up with the rest of the world. My kids tell me there is this thing called "Facebook" that might just catch on. We now have a Facebook page. Perhaps even better, you can "Like" or "Share" individual posts, or you can "Like" the whole blog from the button on the right. For Facebook neophytes like me, the difference between a "Like" and a "Share" is who sees your activity in Facebook. A "Like" will show an excerpt of our post to all of your Facebook friends, and we certainly hope that our readers will want to do a lot of that. If you "Share," you can share the post with only some of your Facebook friends or even e-mail it to whoever you want.
Continue reading "Blogging Like It's 2009 -- Now with Facebook!" »