Vultures, Hyenas, and African Debt: Private Equity and Zambia

A 2007 UK court case involving Donegal, a private equity fund, and the Republic of Zambia, has contributed to an ongoing debate about the operation of so-called vulture funds in African and other developing countries. Donegal sued Zambia for more than fifty-five million US dollars in connection with...

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Bibliographic Details
Published in:Northwestern journal of international law & business 2009-07, Vol.29 (3), p.643
Main Author: Arewa, Olufunmilayo B
Format: Article
Language:English
Subjects:
Court decisions
Funds
Private equity
Sovereign debt
State court decisions
Online Access:Get full text
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Summary:A 2007 UK court case involving Donegal, a private equity fund, and the Republic of Zambia, has contributed to an ongoing debate about the operation of so-called vulture funds in African and other developing countries. Donegal sued Zambia for more than fifty-five million US dollars in connection with a debt owed by Zambia to Romania for Zambia's acquisition of agricultural machinery from Romania pursuant to a credit agreement dated Apr 17, 1979. Donegal acquired the Zambian debt from Romania in 1999. Although the face value of the debt was close to thirty million US dollars in principal amount, Donegal acquired the debt at some eleven percent of face value, or approximately $3.2 million US. The court's statements and findings in the Donegal case reflect its significant concerns about the behavior of Donegal and its agents in transactions surrounding Donegal's acquisition of the Zambian debt from Romania, as well as in Donegal's attempts to enforce the debt against Zambia.
ISSN:0196-3228