kinds of debt restructurings. That was a significant lesson learned for our team. Having all (or as many as possible) of the creditors round the same negotiating table is one of those principles. The ranking of claims should be very carefully considered and respected through intercreditors (such as the co-financing agreement between PSI bondholders and the EFSF), securing for equally ranking claims pari passu and pro rata payments (a matter which resulted in litigation for several years in Argentina’s debt restructuring where this principle was challenged – see NML Capital Ltd v Republic of Argentina). Avoiding coercive action, unless absolutely necessary, is another lesson. Coercive action in democracies, even where intense public interest may be served, triggers high litigation risks. Consensual solutions should be preferred. Greece made the right choice in preferring a consent solicitation and an even retroactively enacted set of CACs, leading to a restructuring based on majority decision to a unilateral reduction of its debt imposed through legislative acts, giving Greece a moral high ground, which no judge can ignore. Burden-sharing by the private sector in large restructurings is also a principle which was confirmed through the PSI. In the aftermath and experience of the Lehman Brothers financial crisis, governments were reluctant to use taxpayers’ money in a debt restructuring even of a sovereign without first seeing the private sector sharing part of the financial burden. This is a principle introduced and cemented also in the legislation and tools developed for bank restructurings and resolutions (SRMR and BRRD, ESM DRI etc.) in response to the Lehman Brothers crisis. In line with this, the effective priority of official sector money through the exemption of the GGBs held by the ECB, the National Central Banks and other Official Sector Institutions from the PSI, was also significant. This unprecedented experience gained by our team through its participation in FEATURE OF THE MONTH 19 such as the significance of the so-called ‘local law advantage’ (namely the power of a sovereign to unilaterally amend debt governed by its laws by enacting amendments) and the choice of the clearing system (in Greece) weighted against the governing law (English) for debt instruments such as the GGBs, to constitutional rights issues, such as the compliance with the Greek Constitution of the retroactive enactment of CACs, the number and complexity of the questions and issues raised was unique. Furthermore, the exposure and experience of advising more than 40 international and Greek banks and insurance companies, through a steering committee organised by the IIF in direct negotiations with the head of government and ministers of an EU sovereign, was a once-in-a-professional-lifetime experience. Above all, however, the PSI reaffirmed that there are some key principles that must be followed and applied in all overspending, made the Greek banking drama even bigger. How were your team at Koutalidis involved in this? What were your respective roles? The restructuring team of Koutalidis Law Firm acted as the Greek counsel to the Steering Committee of private sector creditors, both in the first (but unfinished) attempt for the PSI between July and October of 2011 but also in the actual PSI exchange in 2012. Allen & Overy acted as international counsel in the first attempt, joined by White & Case in the 2012 PSI. The experience gained by our team and the challenges faced were unique. First of all, the very participation in a legal team composed of leading practitioners from two of the top-tier international law firms, working around the clock for almost five months, was an intensive course on coordination and collaboration. Further, the complexity and challenge of the legal issues of PSI was unprecedented. Ranging from conflicts of laws questions, The PSI was one of the key milestones in mastering the Greek financial crisis, but it left deep scars in the Greek economy and society.
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