If hedge funds have their way, Greece will be forced to default so that credit default swaps (CDS) will pay for any losses the debt-troubled country sought to compel investors to accept. A lawsuit in the European Court of Human Rights is being considered as funds try to figure out ways to compel payoffs on Greek bonds.

As previously reported by AdvisorOne, Greece has been working with creditor banks and other investors to come up with a deal in which those investors would accept haircuts of some 50% on new bonds to be exchanged for those presently held. Such a deal is all that stands, at the moment, between Greece and default on its obligations, because if it cannot negotiate a cut in debt with its creditors, it will not receive the next tranche of bailout funding, due in March, and it will be unable to make payments due at that time—possibly leading not just to default but also to a disorderly departure from the euro zone, something very much feared by officials.

However, a New York Times report on Thursday revealed that some hedge funds, who are already reluctant to accept any cut in value of the bonds they hold, are now considering suing Greece on the grounds that changing the terms of those bonds is a property rights violation—and by extension, a human rights violation—in Europe.

While such a move would certainly not gain hedge funds any sympathy, said the report, it is nevertheless being considered. According to an official familiar with ongoing debt talks, Greece is about to offer its creditors a deal in which the interest rate or coupon on new bonds to be exchanged for old ones will be less than the 4% currently being insisted upon—and it will force bondholders to accept. The source was quoted saying, “This is crunch time for us. The time for niceties has expired. These guys will have to accept everything.”