Because healthy competition among all potential creditors is an effective way of reducing the cost of credit, the Guide recommends that the secured transactions regime apply equally to various creditors, including banks and other financial institutions, as well as domestic and non domestic creditors.

A security right will have little or no value to a creditor unless the creditor is able to ascertain, at the time a transaction takes place, its priority in the property relative to other creditors (including an insolvency representative).

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

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

Sovereign debt restructurings with private creditors

Rather than imposing the costs of the ECB s and EFSF s losses on European taxpayers, the banks creditors could give up some of their claims in exchange for receiving shares from the banks owners. Debt equity swaps rescue the banks without rescuing their shareholders.

Debt equity swaps would be a much better way to recapitalize the banks. Rather than imposing the costs of the ECB s and EFSF s losses on European taxpayers, the banks creditors could give up some of their claims in exchange for receiving shares from the banks owners.

10. Encourages further improving the mutual exchange of information, on a voluntary basis, on borrowing and lending among all creditors and borrowers

(c) Transfer of control to the secured creditor if the encumbered assets are certain intangible obligations, other than receivables, owing to the grantor by a third person a bank account

Argentina s interests and those of its creditors were thus aligned both wanted growth. It was the equivalent of a Chapter 11 restructuring of American corporate debt, in which debt is swapped for equity, with bondholders becoming new shareholders.

Debt for nature conversion programmes have also been declining over time, but other debt for development swaps increased in 1997, with focus likely to be shifted in the future to claims held by official creditors.

Because secured transactions affect the interests of various persons, including the debtor, other grantors, competing creditors, such as secured, privileged and unsecured creditors, purchasers and other transferees, and the State, the Guide proposes rules that take into account their legitimate interests and seek to achieve, in a balanced way, all the objectives mentioned above.

The law should provide that the delivery of possession of the assets to be encumbered is to the secured creditor or a third person (other than the grantor or an agent or employee of the grantor) that holds the assets on behalf of the secured creditor.

a transaction involving the transfer of a debt or assignment of a claim.

To the extent that the value of the encumbered asset is insufficient to satisfy the secured creditor's claim, the secured creditor may participate as an ordinary unsecured creditor.

Under the bank advisory committee approach, a borrower reaches an agreement with key creditors to endorse a set of terms (or menu of options) that are then presented to the entire community of bank creditors for their acceptance or rejection.

recognition 67 71 16 Article 19.

National fiscal sovereignty would facilitate the final crucial step building a more mature relationship with private lenders. The eurozone was founded on the no bailout principle if member states could not repay their debts, lenders would bear the losses.

(b) Provide a temporal event for ordering priority among secured creditors and between a secured creditor and other classes of competing claimants.

Table 3 Recent sovereign debt restructurings with private creditors main features

Thus, a debt equity swap of less than 7.5 of the creditors investment would be enough to compensate for the banks losses. And, even if the banks private depositors, whose claims are 39 of the aggregate balance sheet, were excluded, the debt equity swap necessary to compensate for a loss of up to 100 of the equity would be less than 12 of the creditors investment volume.

22 In May 2005, the Dominican Republic concluded an exchange of bonds with its creditors resulting in an extension of the maturity by five years.

(c) Ensure equitable burden sharing with private creditors

Already German, Dutch, and Finish savings amounting to 15,000, 17,000, and 21,000, respectively, per working person have been converted from marketable investments into mere equalization claims against the ECB. No one knows what these claims will be worth in the event of a eurozone breakup.

(f) The possible repercussions for secured transactions and secured creditors in the way in which corporate groups are treated in insolvency.

(ii) A creditor of the assignor or

The view was also expressed that establishing a delay for the turnover of assets to the foreign representative, as provided in paragraph (3), did not constitute an effective measure to protect the interests of local creditors.

Heavily indebted middle income countries must organize their efforts to arrive at joint agreements with the world's creditors.

A note of caution was struck, however, in that regard, to the effect that such laws needed to strike an appropriate balance in the treatment of privileged, secured and unsecured creditors so as to become acceptable to States.

The principle is exactly the same when the holders of the national debt are foreigners (as with Greece), though the political opposition to repayment will be much greater.

The law should provide that a secured creditor with a security right that is not effective against third parties has towards third parties no right other than as an unsecured creditor priority over unsecured creditors unless the unsecured creditor has taken steps to reduce its claim to a judgement or the grantor has become insolvent .

(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

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.

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.

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

With regard to the servicing of the external debt, the country is up to date on its payments to the multilateral institutions and bilateral creditors members of the Paris Club.

Debt equity swaps have been used successfully in many cases, and they follow from normal bankruptcy procedures. Apart from avoiding the excess burden and injustice of taxation, they also have the benefit of inducing banks owners to choose a prudent investment strategy, while persuading creditors to scrutinize and select carefully the banks to which they want to lend.

Philosophically, the debt forgiveness approach rests on the belief that creditors share culpability for defaults with debtors, since they made the bad loans in the first place. As long as the borrower has not misled the lender at the time of taking the loan, the lender bears at least some responsibility for the transaction.

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.

(f) Grantor means a person that creates a security right in one or more of its assets in favour of a secured creditor to secure either its own obligation or that of another person (see debtor).

Right to notify the debtor

Treatment of foreign creditors

The granting of such relief may need to be balanced against potential detriment to the interests of creditors generally or to the debtor's assets.

A debtor s negotiating strategy is to make creditors believe that a collapse would produce some much bigger catastrophe, which can be avoided only by more concessions and more support. That sense is always more likely when the debtor s action comes without warning the financial equivalent of a pre dawn attack.

One approach to this issue is to consider whether the savings to creditors collectively would outweigh the incidental detriment to individual creditors.