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Under the deal, certain reinvestment opportunities will be offered to some existing creditors of the company.
Very little, if anything, of that million dollars will go the paper's existing creditors.
Along with the equity of the good bank, these assets would be owned by the existing creditors.
Greece's existing creditors, from the IMF to other European governments and private banks, would effectively be subordinated, since scarce revenue would be pledged to pay off new creditors.
"The imposition of an irrecoverable fine on an entity now in liquidation is futile and only prejudices the ability of existing creditors to recover any money.
By then, the debtor country could, ostensibly, afford to repay part of what it owed; it's important to reconcile with existing creditors if a country wants to borrow more money in the international markets.
Similar(42)
As a creditor junior to all bank claims, you want bankruptcies where management continuity still exists because they may still be burdened with enough guilt not to dump on their existing junior creditors and shareholders.
The money will also pay existing trade creditors and contractors.
America's challenge is not just to reduce its current-account deficit to a level which foreigners are happy to finance by buying more dollar assets, but also to persuade existing foreign creditors to hang on to their vast stock of dollar assets, estimated at almost $11 trillion.
It has also assigned £2m for existing football creditors for compensation and has projected the club will receive £11m from the Premier League in parachute payments.
The holding company's legal identity would change and holders of bonds issued by that entity would incur losses, but existing contracts with creditors to the operating subsidiaries would remain in place – without any losses for those lenders.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com