The AP is reporting on a UN summit about “What happens when a country is bankrupt and can’t pay its debts?”
Supachai Panitchpakdi, secretary general of the UN Conference on Trade and Development, cited Chapter 11 of the United States Bankruptcy Code, which permits all businesses to reorganize under U.S. bankruptcy laws, as a possible model.
Martin Khorm, executive director of the South Centre, a Geneva-based research organization, said the establishment of an “international debt arbitration system” – which he likened to a kind of international bankruptcy court for developing countries unable to meet their debt payments – was first raised by UNCTAD in the late 1990s and then by the International Monetary Fund, and is long overdue.
Prime Minister Stephenson King of St. Lucia noted that there is no international court to deal with the bankruptcy of a country so every nation would have to rely on its own national rules and regulations.
Norway’s International Development Secretary, Hakon Golbrandsen has called for a UN working group to tackle the question of “a new, independent, fair and transparent debt workout mechanism.”