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The actions of funds speculating in sovereign debt, frequently nicknamed “vulture funds”, are often roundly criticized. These funds purchase distressed debts on the secondary market at reduced prices and then seek payment in court at face value plus interest and fees. Although their actions are legally justified, so-called “vulture funds” are vilified due to the negative impact of their activities on sovereign debtors and their population. While there is a strong demand for regulating sovereign debt speculation, various solutions already exist but are, in many ways, insufficient. This article argues for the adoption of a tailored regulation of the speculative phenomenon by the United States. The article explains that sovereign debt sustainability is the only standard that can ensure the balance between the rights of creditors and the proper functioning of debtor states. This argument justifies the regulation of speculative activities as well as the magnitude that this regulation should take.


This paper is a working paper produced while Justin Vanderschuren was an International and Comparative Law Research Fellow at the University of Michigan Law School, 2022-2023. This working paper was written while being a recipient of a Fellowship of the Belgian American Educational Foundation