Legal Air Cover

ABSTRACT The economic harm being caused by the novel coronavirus may soon result in multiple sovereign debtors moving into default territory, but existing playbook for dealing with multi-sovereign emerging market debt crises is blank. Currently, only way to deal a crisis carry out protracted country-by-country and contract-by-contract negotiated workouts. Expert groups are attempting design mechanism run workouts simultaneously any will take time configure get international buy-in. This article sets forth some options provide temporary legal protection debtor countries while they diverting resources respond Covid-19 pandemic. notion of ‘legal air cover’. we propose involve ex-post state intervention contracts come risks, show that case Greece, where such an was necessary 2012, there were no negative spillovers on periphery eurozone markets associated Greek modification contract terms.