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12 U. St. Thomas L.J. 1 (2015-2016)

handle is hein.journals/usthomlj12 and id is 1 raw text is: ARTICLE SOVEREIGN DEBTORS IN DISTRESS DAVID EHMKEj* I. THE PATH TOWARDS A SOLID DESIGN FOR SOVEREIGN DEBT LENDING The price for these quasi-bailouts is tremendous.' In 2012, Christian Kirchner and I published a proposal for how to resolve the situation of financial distress for sovereign debtors. We concluded that the quasi- bailouts practiced in the European Monetary Union (EMU) have erroneous consequences for a successful monetary union and that state intervention as it has been practiced in the euro crisis creates more harm than good. The topic of sovereign distress is still hot. In this paper, I will follow the path towards a market-approach in sovereign debt restructuring that the late Christian Kirchner, in whose honor I have presented this paper at the St. Thomas Christian Kirchner Memorial Symposium, had shown in our joint- article on sovereign debt restructuring. Different crisis resolution mecha- nisms will be discussed,2 but most importantly the ex ante reflections of ex post outcomes will be analyzed. The Greek tragedy and the Argentina default poker will be analyzed as vivid examples for prominently practiced reactions to sovereign debt distress. The goal of this paper is to identify and analyze the challenges that creditors and sovereign debtors face in their lending relations, considering * David Christoph Ehmke, M.Sc. (Oxford), PhD-Candidate, conducting research on corpo- rate bond debt restructuring in the U.K., U.S., and Germany at the Humboldt-University of Berlin under the supervision of Professor Dr. Christoph Paulus, contact: david.ehnke@web.de. It is based on a presentation at the Christian Kirchner Memorial Symposium in Minneapolis in 2014. My first publication on the issue of sovereign debt restructuring in the Oxford University Compar- ative Law Forum was in joint authorship with the late Professor Dr. Christian Kirchner. I had the great chance to get to know Christian Kirchner as an inspiring teacher while working as a research assistant to him from 2011 to 2013. I am very thankful to Professor Dr. Charles Blankart, Joel Fischer, the participants of the Christian Kirchner Memorial Symposium, and the editors of the University of St. Thomas Law Journal for valuable comments on my presentation and earlier draft versions of this paper. All remaining errors are mine. 1. Christian Kirchner & David Ehmke, Private Ordering in Sovereign Debt Restructuring: Reforming the London Club, OXFORD U. COMP. L. F., http://ouclf.iuscomp.org/articles/kirchner ehmke.shtml (last visited Aug. 14, 2015). 2. For an overview of concepts for sovereign debt restructuring see Kenneth Rogoff & Jer- omin Zettelmeyer, Bankruptcy Procedures for Sovereigns: A History of Ideas, 1976-2001 (Int'l Monetary Fund, Working Paper WP/02/133, 2002). 1

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