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Quantitative Finance · Glossary

What is Collective action clause, holdout creditor?

Also known as: collective action clause · holdout creditor

Definition 26.3 Markets II: Rates, FX and Credit · Chapter 26 — Distressed, Sovereign and Bank-Capital Credit

A collective action clause (CAC) in a bond lets a qualified majority of its holders change its payment terms for all holders, the minority included. A holdout creditor is one that does not accept a restructuring and keeps, or litigates on, its original claim.

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