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Vulture Funds and Sovereign Debt. The Argentine Experience and Its Consequences. The Necessity of a Specific Regulation in the United States to Avoid Future Similar Cases

After the Argentine experience, sovereign issuers have included in their prospectuses certain contractual provisions that aim to avoid future similar interpretations of the pari passu clauses and to subject the holdouts to restructuring proposals accepted by a qualified majority of the bondholders. Notwithstanding, these provisions may not be enough to avoid future similar cases. In such regard, certain foreign countries, including the United Kingdom and Belgium, passed legislation that limits the vulture funds’ ability to take advantage of sovereign distressed bonds. The purpose of this paper is to analyze whether a specific regulation or statute is required to avoid upcoming cases similar to the Argentine experience in the United States. […]