romanian english

Alexandru Chistruga: Vulture funds' theoretical and practical aspects


Abstract: Financial crises are a normal occurrence in all economies, despite the fact that they can be extremely damaging. Because of this cyclicality, players have emerged in the market trying to identify strategies and methods to profit from the financial crises faced by states. Vulture funds, a type of investment fund that falls under the umbrella of hedge funds, are also included among them. Due to the way they operate, vulture funds have the potential to generate returns that are greater than 1000% of the initial investment. One of their tactics entails purchasing distressed sovereign debt at a discount on the secondary market, declining to take part in their restructuring, and bringing legal action to enforce the debt and related interests, one of the consequences being the worsening of the debtors' circumstances. Even though some of their actions might be considered immoral, there are rarely any legal restrictions on the unjustified profits that vulture funds can receive. However Belgium recently passed a law to combat the activities of "vulture" funds.

Keywords: vulture funds; sovereign debt; tactics;


Blakemore J.M., Lockman M.J., Pari Passu Undone: Game-Changing Decisions for Sovereigns in Distress, Emerging Markets Restructuring Journal, Issue No. 3, 2017, pp. 1-5, [Online].

Brutti D. J., Sovereign Debt Crises and Vulture Hedge Funds: Issues and Policy Solutions, Boston College Law Review, Vol. 61, Issue 5, 2020, pp. 1820-1854, [Online].

Caminal R.O., The pari passu clause in sovereign debt instruments: developments in recent litigation, BIS Papers No 72., pp. 121-128, [Online].

Grund S., Enforcing Sovereign Debt in Court – A Comparative Analysis of Litigation and Arbitration Following the Greek Debt Restructuring of 2012, European Central Bank, [Online].

Hedge Pappers, Pain and Profit in Sovereign Debt: How New York Can Stop Vulture Funds From Preying on Countries, HedgePapers No. 75, Decembrie 2021, [Online].

International Monetary Fund, The International Architecture for Resolving Sovereign Debt Involving Private-Sector Creditors—Recent Developments, Challenges, And Reform Options, Policy Paper No. 2020/043, 2020, pp. 1-52, [Online].

Iversen A., Vulture Fund Legislation, Banking & Financial Services Policy Report, Wolters Kluwer, Vol. 38, Number 5, March 2019, University of Oslo Faculty of Law Research Paper No. 2019-57,, pp. 1-12, [Online].

Kamenis S.D., Vulture Funds and the Sovereign Debt Market: Lessons from Argentina and Greece, The Committee for the Abolition of Illegitimate Debt (CADTM), Research papper No 13, 2014,, pp. 1-47, [Online].

Martinez L., Roch F., Roldan F., Zettelmeye J., Sovereign Debt, IMF Working Paper, Volume 2022: Issue 122, 2022,, pp. 1-47, [Online].

Patrick R., Vulture Funds, Creditors and Sovereign Debtors: How to Find a Balance? (March 28, 2011). INSOLVABILITÉ DES ÉTATS ET DETTES SOUVERAINES, M. Audit, ed., LGDJ, 2011, pp. 1-56, [Online].

J. Schumacher, C. Trebesch, H. Enderlein, Sovereign defaults in court, Journal of International Economics, Volume 131, July 2021,, pp. 1-72, [Online].

Wozny L., National Anti-Vulture Funds Legislation: Belgium’s Turn, Colum. Bus. L. Rev. 697, 2017,, pp. 1-51, [Online].

Faculty of Law

B-dul Carol I nr. 11, cod 700506, IAŞI
Secretariat full-time learning:
+40 232 201058
+40 232 201158
Fax: +40 232 201858
Secretariat distance learning:
+40 232 201272
Fax: +40 232 201872

Copyright Faculty of Law, IAŞI , 2024
The server generated the answer in 0.0884 sec.