PSI compensation claim dismissed

The General Court of the European Union has rejected a claim for compensation from owners of Greek debt who participated in the 2012 restructuring, according to a decision released Wednesday.

The motivation for the above verdict was that the losses suffered by the plaintiffs corresponded to the risks involved in doing business in the credit sector and that they were not treated unfairly compared to other debt holders. It also indicated that it did not have the competence to rule on any responsibility of the Eurogroup, given the informal nature of the latter.

The 2012 haircut on Greek debt held by private investors, known as Private Sector Involvement (PSI), concerned the bondholders’ agreement to reduce by 53.5% the face value of the debt they held. Based on the Collective Action Clauses (CAC), the swap became mandatory even for private investors who had rejected the voluntary arrangement, including those who resorted to European justice.

The claim called for compensation for the losses of debt holders as a result of the forced exchange of public debt, following decisions by the Eurogroup, the European Commission and heads of state and government.


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