(b) The treatment of intra group debts (claims against the debtor company by related group companies) and

24 Collective Action Clauses included in bond or loan contracts would prevent a minority of creditors from blocking negotiations with the debtor.

Intra group debts

(a) The responsibility of any other company in the group for the external debts of the insolvent company (being all debts owed by the insolvent company except for those owed to related group companies, i.e. intra group debts )

Under some insolvency laws that provide for consolidation, intra group obligations are terminated by the consolidation order.

Group of 77 (on debt)

C. The Group of Eight proposals for debt cancellation for Heavily Indebted Poor Countries

Group responsibility for external debts

One of Strike Debt s initiatives, Rolling Jubilee, crowd sources funds to buy up and extinguish debt, a process that it calls collective refusal. The group s progress has been impressive, raising more than 700,000 so far and extinguishing debt worth almost 18.6 million.

It is worth giving serious consideration to the G 10 proposal for inclusion of special clauses in debt contracts to allow for collective representation of creditors and qualified majority voting on changing the terms of the contract, and to force sharing of proceeds of debt repayments.

Group of 77 (core group on debt)

Group of 77 (core group on debt)

The Regional Bureau for Africa of UNDP, in collaboration with UNCTAD s Debt Management and Financial Analysis Section, has focused on improving collection, compilation, recording and reporting of debt data, installation and operation of software packages, training of national staff, and reinforcing of institutional capacity for debt management.

The law governing the original contract determines the effectiveness of contractual limitations on assignment as between the assignee and the debtor, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and whether the debtor's obligations have been discharged.

Where the security right at issue (which secures the debtor's obligation) is granted by the debtor, the term debtor also refers to the grantor.

We must commend the efforts of the Group of Eight to cancel the debt of those developing countries designated by the United Nations as heavily indebted poor countries.

Although those suggestions raise a number of concerns that should be considered, they appear to provide a reasonable and practical means of facilitating discussion between creditors and debtors following the eruption of a financial crisis where bondholders represent the major creditor group.

77. Some formal framework is needed to prevent moral hazard behaviour by debtors and to allow payments suspensions which are part of a process of cooperative and non confrontational debt renegotiation between debtors and creditors.23 There are no formal means for explicitly approving decisions by sovereign debtors to suspend payments.

13. The core of the debt problem that remains to be solved is the unsustainable debt positions of the group of 41 HIPCs.

First, it aims to ensure that obligations are fairly and regularly met when a debtor becomes financially insolvent. Thus, it seeks to protect the lawful rights of both creditors and debtors.

(b) Facilitating the gathering of information about the debtor apos s assets and affairs, and protecting and maximizing the value of the debtor apos s assets for the purposes of administering a cross border insolvency

Group of 77 (on the draft resolution on debt)

(b) Recognition that debtor States can invoke the rebus sic stantibus principle (fundamental change of circumstances rule) (the obligation is extinguished and the debtor is released from it when its fulfilment is impossible, very onerous or essentially different from when the debt was contracted)

In the insolvency of a non grantor debtor, the creditor is an unsecured creditor with an unsecured claim against the non grantor debtor.

1. Reporting obligations on personal debts or liabilities

2.2 Contractual public debt

(e) Debtor means a person that owes performance of the secured obligation and includes secondary obligors, such as guarantors of a secured obligation .

Debtor

(b) Property rights created contractually to secure all types of obligations, including future obligations, fluctuating obligations and obligations described in a generic way

(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

Intra group debts may be dealt with in a number of ways.

Failure of the assignor to perform the original contract does not entitle the debtor to recover from the assignee a sum paid by the debtor to the assignor or the assignee.

Other approaches involve classifying intra group transactions differently from similar transactions conducted between unrelated parties (e.g. a debt may be treated as an equity contribution rather than as an intra group loan), with the consequence that the intra group obligation will rank lower in priority than the same obligation between unrelated parties.

The lessons learned point to the need to reach an international understanding on debt restructuring modalities (including voluntary code and international arbitration or mediation mechanisms) which would bring together official and private creditors in a collaborative and constructive dialogue with a view to resolving debt problems in an expeditious and timely manner and to equitably protecting the interests of debtors and creditors.

The African Group welcomed the proposal by G8 leaders for 100 per cent cancellation of debt owed by 14 African HIPC completion point countries and the Paris Club negotiations for the comprehensive debt treatment for Nigeria as important steps in addressing the issue of debt sustainability.

Furthermore, where the debtor company belongs to a group of companies, it may be difficult to untangle the specific circumstances of any particular case to determine which group company particular creditors dealt with or to establish the financial dealings between group companies.

The G 8 countries have agreed on substantial debt relief for a number of countries.

(c) To bring international debtors and creditors together in relevant international forums to restructure unsustainable debt in a timely and efficient manner, taking into account the need to involve the private sector in the resolution of crises due to indebtedness, where appropriate

We welcome the G 8 proposal for irrevocable debt cancellation for the HIPC countries, a proposal that has generated high expectations in eligible countries.

We welcome the decision of G 8 nations to write off the debt of 18 highly indebted poor countries in the amount of 40 billion.

In case an enterprise merges another insolvent enterprise through assuming the liabilities of the latter, the merging party shall set down measures for restructuring, undertake the responsibility of repaying the debts and integrate the financial resources according to the merging plan.

15. Reiterates the importance of the orderly resolution of sovereign debt crises, notes the increasing voluntary use of collective action clauses in international sovereign bonds, and takes note of the efforts led by sovereign debtors and private creditors to develop a voluntary code of conduct for the resolution of sovereign debt crises

The restructuring of debt owed to private creditors was also an important aspect of external debt crisis resolution. The introduction of collective action clauses and the development of a voluntary code of conduct by private creditors and sovereign debtors were the major ongoing initiatives in that area.

In response, it was pointed out that an approach based on the law of the country of the debtor apos s place of business would not be appropriate, since draft article 24 dealt with competing rights of creditors of the assignor and not with the rights and obligations of the debtor.

They included the recent G 8 decision on the cancellation of debt owed by 18 heavily indebted poor countries, among them Mali.