France to restrict vulture funds’ claims

France is to consider a law including an amendment that will restrict the activities of so-called vulture funds.

Socialist members of the French national assembly have amended the draft law on transparency, anti-corruption and economic modernisation (Loi Sapin 2) in order to limit claims brought by vulture funds against states facing sovereign default.

France wants to avoid cases such as the Argentina’s 15-year dispute with its creditors regarding its default on its foreign debt.

The battle ended in February 2016 with a $4.65bn (€4.27bn) cash agreement between US vulture funds and the Argentinian government.

States having faced a sovereign default and having been granted an aid from the French government (official development assistance) will be protected by the law.

If the text is voted as it stands, vulture funds will therefore need to be delivered an authorisation from the court before proceeding to any seizure for a debt recovery.

A similar law has been voted in Belgium last year. Hedge funds NML Capital and Yukos Universal have taken legal action against the Belgian law in March 2016.

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