4 Chi J Intl L 257
Michael T. Hilgers

The International Monetary Fund recently proposed the creation of an International Bankruptcy Court to handle sovereign debt restructuring. One of the major concerns raised with this proposal is the fact that the IMF would be acting as both creditor and arbiter. This Development uses US law as a guide to analyze the problems of having the IMF act as both a creditor and arbiter of sovereign bankruptcies. It first provides a brief background of sovereign bankruptcies, global capital markets, and the IMF. It then examines the effectiveness of the US system and explains how the application of the US Bankruptcy Code might efficiently handle some of the problems inherent in an IMF-based bankruptcy proceeding. After examining the various issues, the Development suggests that an independent arbiter is necessary. As such, it concludes that an IMF-led bankruptcy court would ultimately face serious difficulties in dealing with sovereign debt restructuring.