Vulture, Tigers And Lions: New African Development Bank Legal Support Facility Set Ambitious Goals.
By: Ainsley Brown
The African Development Bank (AfDB) has engineered a legal support wing charged with the responsibility of evening out the imbalance in legal expertise that many African nations face when negotiating complex commercial transactions. It will also serve as a necessary firewall for these nations by providing top notch legal advocacy when facing litigation, especially from vulture funds.
Vulture funds?
The aptly named vulture funds or as better known in investment circles: distressed debt or special situations funds, are those hedge or private equity funds that buy up debt -in this case sovereign debt – at very low rates in the market or directly from a company or nation at a point when either is illiquid and distressed. Circling like vultures they buy up this debt with the intention of later bringing suit for recovery at grossly inflated prices as compared to what they paid for the debt.
Most of the cases brought by Vulture funds are either brought in US or UK courts, a point that has not gone unnoticed by NGO´s and legislators alike in both countries. Due to pressure and effective information dissemination by NGO´s, they have managed to bring the issue to the fore enough to see legislation introduced in both the US and UK aimed at curbing the vultures.
The question now is whether these new pieces of legislation, if passed, when combined with the new AfDB legal support facility will be enough to keep the vultures at bay?
It is my hope that either by themselves or combined they are not so watered down and ineffective that they are paper tigers but are the roaring lions they need to be to take on such a monumental task – let’s hope.
