A collective action clause (CAC) allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring. Bondholders generally opposed such clauses in the 1980s and 1990s, fearing that it gave debtors too much power. However, following Argentina's December 2001 default on its debts in which its bonds lost 70% of their value, CACs have become much more common, as they are now seen as potentially warding off more drastic action, but enabling easier coordination of bondholders.
During the financial crisis of 2011–12, the Greek government imposed, with the support of the IMF and ECB, a retroactive CAC with a threshold of 75%.[1] That impacted 90% of the bonds, which issued under the jurisdiction of Greek courts.[1] On 9 May 2012, the required supermajority was obtained, with 85.8% of domestic-law bonds tendered in favour.[2] An investor named Bill Gross said, "The sanctity of their contracts is certainly lessened. Bondholders have that to look forward to going into the future,"[2] but the French Minister of Finance celebrated the deal.[2] In the exchange, investors will receive new bonds with a face value of 31.5 percent of the old ones, together with notes from the EFSF.[2] The new debt is governed by English law and comes with warrants that may provide extra income in years if Greek economic growth exceeds thresholds.[2][3]
In accordance with the treaty establishing the European Stability Mechanism, all bonds issued by Eurozone member states with maturities exceeding one year, issued after January 1, 2013, have a mandatory collective action clause. [4]
^ abWSJ.com: "2nd UPDATE: Greece To Introduce Retroactive Collective Action Clauses-Source" 9 Jan 2012
^ abcdebloomberg.com: "Greece Pushes Bondholders Into Record Debt Swap" 9 Mar 2012
^Collective Action Clauses: No Panacea for Sovereign Debt Restructurings
^Collective Action Clauses in Euro area Archived 2014-08-11 at the Wayback Machine
and 28 Related for: Collective action clause information
A collectiveactionclause (CAC) allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond...
local financial assets into foreign financial assets freely Collectiveactionclause, a clause that allows a supermajority of bondholders to agree a debt...
selection clause. Arbitration clauses are frequently paired with class action waivers, which prevent contracting parties to file class action lawsuits...
some supermajority is typically spelled out in what are known as CollectiveActionClauses, or CACs. In some jurisdictions, CACs or their equivalents are...
Greek government threatened to and did introduce a retroactive collectiveactionclause to enforce participation. The cash will be handed over after it...
Exchange Offers: The Basics". Debevoise. Retrieved 2017-09-29. "Bond Exchange Offers or CollectiveActionClauses?" (PDF). Retrieved 2017-09-29. v t e...
citizens. Class action waivers may be found on a standalone basis, though they are more commonly found as part of an arbitration clause, and when paired...
attorneys included a boilerplate pari passu clause, but neglected to include a collectiveactionclause. Pari passu is a term generally used to signify...
the Supreme Court established that the reserve clause was a legitimate basis for negotiation in collective bargaining between players and owners, and that...
debt reduction ... Collectiveactionclauses, which now exist in most—but not all—bonds would be relied upon to address collectiveaction problems." According...
is a group of people who are represented collectively by a member or members of that group. The class action originated in the United States and is still...
security clause in their contract with management. Dues are generally 1–2% of pay. However, union members and other workers covered by collective agreements...
powers to Congress, and the Vesting Clause does not reassign those powers to the President. In fact, because those actions require legislation passed by Congress...
benefits, and working conditions. A collective bargaining agreement may include a clause (a contractual "no-strike clause") which prohibits the union from...
includes the Citizenship Clause, Privileges or Immunities Clause, Due Process Clause, and Equal Protection Clause. The Citizenship Clause broadly defines citizenship...
and can not be assumed to exercise control over the perpetrator's actions. Collective punishment is prohibited by treaty in both international and non-international...
The Equal Protection Clause is part of the first section of the Fourteenth Amendment to the United States Constitution. The clause, which took effect in...
the Greek government threatened to retroactively introduce a collectiveactionclause to enforce participation. Eventually, private-sector involvement...
on the net present value of the debt. The agreement included a collectiveactionclause to force recalcitrant holders to participate. A debt sustainability...
almost all cases. The Petition Clause protects the right to petition all branches and agencies of government for action. In addition to the right of assembly...
2020, and, from then on, the term denotes a real event. CAC 1. Collectiveactionclause: agreement in the issuance of bonds that allows a supermajority...
contracts, thus instigating a credit event. The ISDA said the use of "collectiveactionclauses (CACs) to amend the terms of Greek law-governed bonds issued by...
the Senate. In combination with the vesting clauses of Article Two and Article Three, the Vesting Clause of Article One establishes the separation of...
Development. In particular, she was involved in the drafting of the collectiveactionclauses in Argentina's sovereign debt contracts. She is frequently quoted...
use of the Notwithstanding Clause to impose a contract on education workers "wrong". He told reporters "I know that collective bargaining negotiations are...
an arbitration clause in a consumer standard form contract which waived the right to a lawsuit and class action. However, this clause was relatively generous...
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