How does Brady-type commercial debt restructuring work?

The Brady Plan is a pragmatic approach to debt restructuring that combines the relatively recent feature of debt and debt service reduction and the support of official creditors. The underlying premise of those adopting the Brady Plan is that the existing stock of debt can never be fully serviced, even through the country has embarked on a far-reaching adjustment program. To date, only a handful of countries (Costa Rica, Mexico, Uruguay, and Venezuela) have successfully concluded their debt reduction negotiations through a Brady Plan with commercial creditors. Others, such as the Philippines, have engaged in Brady-type debt reduction for part of their outstanding commercial debt. The author explains what happens when, in response to a country's request, the creditors agree to negotiate to reduce the burden of outstanding commercial debt.