For Immediate Release
UN Global Bankruptcy Negotiations Could Stop Predatory Hedge Funds
WASHINGTON - The United Nations votes on negotiation procedures to create a global bankruptcy framework today at 3:00 PM EST in New York. This procedural vote comes after the UN General Assembly voted 124-11 to start negotiations on a debt resolution process for countries in September. The September UN debate illustrated growing consensus on a legal framework that could prevent global financial crisis, limit country defaults and stop predatory behavior. The UN General Assembly advocates greater action in the wake of Argentina losing a major sovereign debt case to a group of so called "vulture funds."
"Even though this UN vote focuses on negotiation procedures, we see countries who previously questioned the process now supporting the idea of bankruptcy," shared Eric LeCompte, Executive Director of Jubilee USA, a religious group that advocates financial reforms to protect poor people.
The UN debates a resolution on the negotiation process for establishing a bankruptcy framework. That resolution calls for the UN to create a committee that will begin work on the process, with initial meetings set for late January. The committee would be based in New York and the UN Secretary-General would invite member states and other stake-holders to submit testimony to the committee. The resolution calls for the International Monetary Fund (IMF) and World Bank to participate as well. The President of the General Assembly would ensure that the committee completes its work before September 2015.
"Defaults and the need to restructure debts are becoming too common," said LeCompte, who serves on UN expert working groups that focus on these issues. "A global bankruptcy process is a global solution."
The bankruptcy process could reduce litigation because hold-outs are required to participate in debt restructuring processes. The Argentina case began after the country's 2001 debt default. NML Capital and other funds refused to participate in Argentina's debt restructuring deals and sued the country in US courts. A federal judge ruled that Argentina could not pay the 92% of its bond-holders that accepted the restructurings unless it paid the hold-outs in full. The Supreme Court allowed that ruling to stand. In addition to the UN vote in September, the IMF, the G20 and banks and investors all released proposals this year to address the issue.
"It's exciting to see a global consensus against this predatory behavior," added LeCompte.
Read today's UN resolution that establishes negotiations for a bankruptcy process.
Read the September UN resolution that approved a global bankruptcy framework.
Read a timeline and history of the Argentina / NML case.
Jubilee USA Network is an alliance of more than 80 religious denominations and faith communities, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America.