Bargaining in financial restructuring: market norms, legal rights and regulatory standards

In the 1990s large financial restructurings were typically negotiated by reference to the market conventions of the day, reflected in a set of principles known as the London Approach. Commentary on the London Approach at the start of the last decade sounded a note of caution for its survival in rapidly changing credit markets. This article is about what happened as parties moved away from negotiating by reference to market norms towards negotiating by reference to their strict legal rights. It considers the difficulties which have arisen and whether these are best tackled by law and the courts or by the market and regulation.