CreditSlips

Mark Weidemaier and Mitu Gulati

Delivering pandemic-fighting resources through debt relief channels poses at least three overlapping implementation challenges--no bandwidth today, Groundhog Day tomorrow, and inter-creditor equity forever--in addition to the challenge of monitoring the use of proceeds I flagged in Part I. I sketch these three below, alongside three possible solutions -- a model standstill agreement for all kinds of debt, retrofitting contingent standstill terms in all kinds of debt contracts, and a standing sovereign debt coordinating group.

The success rate for Public Service Loan Forgiveness applicants has doubled. From 1% to 2%.

Thinking they have completed their 10 years of payments, 140,000 student loan borrowers had applied for cancellation through February 29, and about 3,000 had received a discharge, including 1,300 under the “temporary expanded” PSLF who were put in the wrong repayment plan by their servicers.

Today is the final day of my Duke-NYU sovereign debt seminar with Steve Choi and Lee Buchheit, and that makes me sad.  The students have delivered in spades this term, notwithstanding the disruptions to their lives as a result of corona drama. I can't begin to express how proud I am.  And teaching with Steve and Lee (with cameos by Ugo Panizza, Mark Weidemaier, Theresa Arnold, Anna Gelpern, Jeromin Zettelmeyer, Chanda De Long, Yannis Manuelides, Anna Szymanski, Felix Salmon, Jon Zonis, Robin Wigglesworth, and Colby Smith) has been special.

The Business Law Section of the American Bar Association has posted a model standstill/tolling agreement drafted by Jonathan Lipson and Norm Powell. Business relationships will undoubtedly strain as the crisis means more parties are not able to fulfill their side of a deal.