Debt Recovery

Felix Salmon tries a defense of Vulture Funds. The major distress of distressed-debt comes in the practice of buying up the debt. Should the Courts allow transfer of Creditor rights through purchase, after the Debt has already been abrogated by the Debtor? Felix does point out that it is a two-sided argument: the side of the Vulture stating they are Specialists of Debt reclamation, and it is a Risk-venture where they are best able to eliminate the Debt outstanding in the most amiable method to both Creditor and Debtor; while the Opponents of Vulture Funds claim this transfer of Debt obligations impose adverse impact future obligations upon the Debtor. Felix provides a very long Post, but it is worth the time to Read.

The real Solution to the Issue is clear legal establishment of the role of Vulture Funds in the eyes of the Court–something which will likely require legislative action or multinational Treaty. Two separate Venues could be adopted: 1) a disallowance of any transfer of Creditor rights, stating that extension of Debt carries the responsibility of it’s legal recovery which cannot be transferred; and 2) legal establishment of the principle that Debt recovery can only be attained through the agency of Vulture Funds, i.e., Creditors must sell their Debt to acceptant Distressed-Debt recovery agents, who are to be acknowledged and bonded to adhere to Treaty-established Standards of Conduct. The Former, for a variety of reasons too difficult to explain here, actually works out to be practically unworkable because the process of Debt-recovery in long, complex, and expensive from the point of view of litigation. The Later is very workable, actually easy to work into Trade Agreements, and brings a sound rationality to the practice of Debt recovery.

The assumption of Debt has always presented real problems of legal enforcement. The principle is simple: Creditors who extend funds to Debtors hold the unilateral right to be repaid those funds under the agreed terms of the Debt. This principle is supposed to be sacrosanct, and be a fundamental Property Right. The Courts are bound to perceive Debt abrogation as a Debtor violation of sound Business practice, and while not necessarily a felony, certainly a misdemeanor.
The Courts face real challenge in Debt abrogation Cases, therefore, because of subsidiary evidence that the Debtor could not have repaid the Debt in any case, and both Creditor and Debtor were under a misapprehension that Debt obligation fulfillment could be obtained. Specialized Debt Recovery Agents would be a great relief to the Courts, as would a formalized program of Debt Recovery. lgl