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Abstract

The new challenges presented by the current Eurozone crisis and the NML Capital v. Argentina case are likely to shift the international community's attention from holdout behavior in foreign bonds restructuring to inter-creditor issues. In the past years, many academics, and nongovernmental organizations concerned with debt relief, have put forward proposals to create a bankruptcy regime for states. But none of these proposals has seriously examined what rules should apply to treatment among creditors. Moreover, all insist that there must be a collective proceeding for all sovereign debt claims, without explaining why. This approach is simply taken for granted, as it is one of the fundamental principles of bankruptcy law. The article questions this orthodoxy through examining the nature of sovereign debt crisis, the feature of the limited pool of sovereign assets, and the nonliquidable fact of the sovereign debtor. It also argues that the common pool problem does not exist in the sovereign debt context.