United Nations Votes for Global Bankruptcy Principles

 

A United Nations committee adopted nine principles to create a global bankruptcy process for countries. Nobel Laureate Joseph Stiglitz addressed the final session of "The UN Ad Hoc Committee on Sovereign Debt Restructuring" that the UN General Assembly established last fall. Countries currently cannot access bankruptcy protection when they face economic crisis. The World Bank notes that 49 countries face worrying levels of debt distress and the International Monetary Fund notes debt is the root cause of inequality. In recent months, governments across the Caribbean, Greece and Argentina expressed an immediate need for a global bankruptcy process.

"With so many countries facing debt crises, we urgently need solutions to protect investors and poor people," noted Eric LeCompte, who is participating in the UN meetings. LeCompte is the executive director of the religious development organization Jubilee USA Network. "The UN's work is a step in the right direction, but we still have a lot of work to do if we want a legally binding process."

The principles aim to enhance "predictability and stability" in the global financial system. Similar to US Bankruptcy Chapter 9 or 11 laws, the UN principles include good faith engagement by borrowers and lenders, transparency, impartiality and equitable treatment for all investors. The International Monetary Fund is also discussing aspects of a bankruptcy system and laid out an agenda in 2013.

"These principles provide a basis for greater financial stability and the ability to reduce poverty," said LeCompte, who consulted the United Nations Conference on Trade and Development on producing a bankruptcy road map for the United Nations. 

On July 13, Pope Francis endorsed a global bankruptcy process while speaking to reporters in Latin America. "If a company can declare bankruptcy," the Pope asked, "why can't a country do so?"

"Pope Francis endorses a global bankruptcy process to protect the poor and stave inequality," said LeCompte. 
 

Jubilee USA Network is an alliance of more than 75 US organizations and 400 faith communities working with 50 Jubilee global partners. Jubilee's mission is to build an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org

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