However, a goodwill clause was included in the final agreement, stipulating that creditors were ready to review Gabon's debt situation in 2005.

In December 2004, Congo reached an agreement with Paris Club creditors to treat the maturities falling due between 2004 and 2007 under the Naples Terms.

Creditors in insolvency proceedings

Eventually, the agreement will trigger Grexit, either because the creditors withdraw their support after fiscal targets are missed, or because the Greek people rebel. Triggering that exit is transparently Germany s intent.

(j) Treatment of secured creditors

Sovereign debt restructurings with private creditors

The delay in reaching an agreement enabled most private creditors to escape the consequences of their reckless lending to Greece. Roughly half of Greece s external debt migrated from the private sector to official institutions.

(d) Ensure equitable treatment of similarly situated creditors

Both sides have known throughout the tortuous negotiations of recent months that failure to reach an agreement would benefit no one. Greece s economy would contract even further, and its creditors would have to accept even larger write offs.

In part, this is because creditors would otherwise stop extending credit and demand repayment at the first sign of trouble. This is because the first creditors to be paid would receive the full amount owed to them, leaving less for later creditors and thus creating an incentive for all creditors to rush for the exits even before debt servicing had become impossible.

The result is that the separate existence of all the companies that are subject to the pooling agreement is, in effect, ignored and all unsecured creditors of all companies participate equally in distributions from a single pool of assets.

Creditors of a corporation cannot recover debts from a shareholder.

Table 3 Recent sovereign debt restructurings with private creditors main features

The recent experiences of debt restructurings with private creditors are very diverse.

But this implies a key problem Whereas a bankruptcy court can force holdout creditors to accept the exchange offer as long as a significant majority of creditors have already done so (a so called cram down ), the market based approach allows some creditors to continue to hold out and sue to be paid in full.

Priority between the assignee and the insolvency administrator or creditors of the assignor

Emphasizes that creditors and debtors must share responsibility for preventing unsustainable debt situations

The authors allege that they are the State's principal private creditors in Argentina.

(a) By control has priority over the rights of all other secured creditors

4. Emphasizes that creditors and debtors must share responsibility for preventing unsustainable debt situations

(h) Recognize existing creditors rights and establish clear rules for ranking of priority claims.

(172) The insolvency law should specify whether secured creditors are required to submit claims.

For both borrowers and creditors, the risks and costs are enormous. The borrower is cut off from international markets, and essential imports can no longer be purchased, while large scale defaults threaten to plunge creditors into insolvency.

On 29 June 2005, the Paris Club creditors announced their agreement to enter into negotiations with Nigeria on a comprehensive exit debt treatment, which would include debt reduction up to Naples terms on eligible debts and a buy back at a market related discount on the remaining eligible debts.

They create the rules and provide the certifications that allow firms to assure their customers, workers, and neighbors that what they do is safe. They protect creditors and minority shareholders from miscreant managers (and managers from impulsive creditors).

3. Also emphasizes that creditors and debtors must share responsibility for preventing unsustainable debt situations

Emphasizing the important role that private sector creditors play in debt relief and debt sustainability,

(a) Whether creditors have dealt with a group of companies as a single economic unit

Since the last report, six African countries have rescheduled their debt with Paris Club creditors.

Paris Club creditors cancelled US 823 million of debt, and US 737 million was rescheduled.

At the end of the day, debt forgiveness benefits creditors as much as it helps debtors. Creditors have known this since at least the sixteenth century, when Spain s King Philip II became the world s first known serial sovereign defaulter.

Two recommendations dealt with creditor participation in reorganization proceedings (a) to limit the number of creditor committees to a single committee, except in extraordinary circumstances and (b) in smaller reorganization cases where creditors might have little interest in forming a committee, to provide for the appointment of a creditors' representative to monitor the case and negotiate a reorganization plan on behalf of unsecured creditors.

At a minimum, creditors would have to examine more carefully those to whom they are lending, and where the money is really going. If creditors turn a blind eye to corruption and oppression, they should have to pay a price.

The most noteworthy was the IMF sovereign debt restructuring mechanism,29 which suggested some core features majority rule in restructuring decisions, a legal stay against claims by creditors, protection of creditors' interests, seniority of new money and a dispute resolution forum.

(3) to set down the scheme for debt disposal or inheritance through negotiating with the creditors

(b) Whether the affairs of the group are so entangled that a consolidation would benefit all creditors

(i) An extension is necessary to maximize the value of assets for the benefit of creditors and

Yet Greece's creditors have continued to ignore these developments. This is clearly not sustainable a point that former Director of the International Monetary Fund's Europe Department Reza Moghadam recognized when he recently called for writing off half of Greece's debt, provided an agreement can be reached on credible growth enhancing structural reforms.

In the US, the usual bankruptcy rules allow regulators and courts to hold a bankrupt company s operations together long enough to determine if the firm is worth more dead than alive. The law stops creditors from grabbing assets after the company enters bankruptcy, and it recalls many payments made to favored creditors in the 90 days before bankruptcy was declared, so that all creditors facilitate the firm s survival.

Successor Agreement to the International Agreement on

The conclusion that Greece needed official loans to repay its private creditors ensured that Greek debt remained large, compelling eurozone leaders to demand economically debilitating fiscal austerity. Last year, it became clear that Greece could not repay its official creditors on the agreed terms.

The broader message of the Greek move is that coordination has so far been a code word for almost total control by creditors (sometimes together with the ECB). The attempt to impose a benevolent creditors dictatorship is now being met by a debtors revolt.

(e) Protection of the insolvency estate against the actions of creditors, the debtor itself and the insolvency representative, and where the protective measures apply to secured creditors, the manner in which the economic value of the security interest will be protected during the insolvency proceedings

The majority of Peru's creditors have indicated their acceptance, and payments are to be made in August 2005.

Under the Staff Monitored Programme, the Government developed a plan to clear its arrears to all external creditors.