Cooper: Chapter 11 for Countries

Cooper, RN. 2002. Chapter 11 for Countries. Foreign Affairs 81: 90.

This article explores the possibility of a changing IMF policy towards debtor nations: let them temporarily suspend payments to the creditor in order to get things in order and resume payments. In essence, it is, as the title of the article indicates, the ability for countries to file for bankruptcy.

This would allow countries who fall on hard times to avoid the rush of creditors attempting to get their assets as quickly as possible. Also, if this type of provision follows US bankruptcy law, it would allow a majority of creditors to determine the repayment structure. Currently, countries must pay back and renegotiate with all of the different creditors separately.

The remainder of the article discussed two things: the exact mechanics of how a Chapter 11 type of provision within the IMF would take form and the nature of financial crises.