archives@tulane.edu / The overarching argument in this study is that although sovereign distressed debt investors can create holdout problems during the debt restructuring of a defaulting sovereign, the reality is that they remain a linchpin for an efficient sovereign debt market that guarantees the flow of private credit for capital formation in the Global South. In other words, holdout creditors are a bit of a curate's egg, a necessary feature of the sovereign debt markets. They are not the “spawn of the devil”. The presence of distressed debt investors in the market contributes to the liquidity and efficiency of the market. They enable non-litigant investors who would like to sell their debt and exit the market on their own volition to do so. In addition, they tend to put pressure on recalcitrant sovereign debtors who might not be acting in good faith. They therefore possess “nuisance value” that could spur efficiency in the sovereign debt market. In this context, a universal framework for dealing with holdout problems during the debt restructuring of a defaulting sovereign is needed and that is what this study proposes. Such rules can be developed into a soft-law mechanism spearheaded by the International Monetary Fund (IMF). A global normative framework that has elements of nonmarket private standard setting and nonmarket public standard setting, is therefore proposed to address the disruptive and exploitative activities of these creditors in the sovereign debt market. This normative framework would strike the delicate balance between the rights of commercial creditors on the one hand, and interests of sovereign debtors on the other hand, and inject some measure of equity into the process. In summary, this study challenges the contemporary negative and dismissive narratives about holdout creditors, and the assumption and unshaken faith placed on “restructuring or workout of sovereign debt” as the only favored path to alleviating the perennial problem of sovereign default and the attendant debt crises in the developing world. / 1 / MARIA OLUYEJU