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Restructuring government debt under local law: the Greek case and implications for investor protection in Europe
Capital Markets Law Journal  (IF),  Pub Date : 2017-04-01, DOI: 10.1093/cmlj/kmx023
Sebastian Grund

Five years after Greece implemented the biggest sovereign debt restructuring in history, its legal design has been vindicated by European courts and international tribunals. Bondholders have exhausted all potential legal avenues to challenge the debt workout but Greece ultimately held the upper hand. This article sheds a light on the most seminal decisions, discussing their implications for possible future restructurings of local law bonds, which continue to be prevalent in Eurozone Member States. While the retroactive insertion of Collective Action Clauses facilitated a relatively smooth Greek debt swap, governments ought to carefully study the recent jurisprudence of European courts, which set important limits to governmental interference with bondholder’s property rights. By mapping three potential future debt restructuring scenarios with post-Greece case law, this article strives to provide further clarity to both governments and creditors as regards the legal design of Private Sector Involvement in Europe.