S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2102--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 23, 2023
                                ___________
 
 Introduced  by  M.  of  A.  DAVILA, RIVERA, GONZALEZ-ROJAS, CRUZ, CLARK,
   REYES, MAMDANI, BURDICK, MITAYNES, GALLAGHER, COLTON, FORREST,  SIMON,
   TAYLOR, JACKSON -- read once and referred to the Committee on Banks --
   committee  discharged,  bill amended, ordered reprinted as amended and
   recommitted to said committee

 AN ACT to amend the banking law, in relation to restructuring unsustain-
   able sovereign and subnational debt
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  banking  law is amended by adding a new article 7 to
 read as follows:
                                 ARTICLE 7
                      SOVEREIGN AND SUBNATIONAL DEBT
 SECTION 300. LEGISLATIVE INTENT.
         301. DEFINITIONS.
         302. PETITION FOR RELIEF; RECOGNITION.
         303. NOTIFICATION OF CREDITORS.
         304. DEBT RECONCILIATION.
         305. SUBMISSION, CONTENTS AND VOTING ON PLAN.
         306. FINANCING THE RESTRUCTURING.
         307. PRIORITY OF REPAYMENT.
         308. ADJUDICATION OF DISPUTES.
         309. APPLICATION; OPT IN.
   § 300. LEGISLATIVE INTENT. THE PURPOSE OF THIS ARTICLE IS  TO  PROVIDE
 EFFECTIVE  MECHANISMS  FOR  RESTRUCTURING  UNSUSTAINABLE  SOVEREIGN  AND
 SUBNATIONAL DEBT SO AS TO:
   1. REDUCE THE SOCIAL COSTS OF SOVEREIGN AND SUBNATIONAL DEBT CRISES TO
 RESIDENTS OF THIS STATE;
   2. REDUCE SYSTEMIC RISK TO THE FINANCIAL  SYSTEM,  A  SYSTEM  THAT  IS
 CONCENTRATED IN THIS STATE;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02418-04-3
 A. 2102--A                          2
              

 
   3.  REDUCE  CREDITOR UNCERTAINTY, INCLUDING TO THE NUMEROUS HOLDERS OF
 SOVEREIGN DEBT THAT ARE RESIDENTS IN THIS STATE;
   4.  STRENGTHEN THE ROLE OF THE STATE OF NEW YORK AS A PRIMARY LOCATION
 FOR THE ISSUING AND TRADING OF SOVEREIGN DEBT;
   5. REDUCE THE NEED FOR SOVEREIGN AND SUBNATIONAL DEBT BAILOUTS,  WHICH
 CREATE MORAL HAZARD AND ARE COSTLY TO RESIDENTS OF THIS STATE;
   6. OTHERWISE PROTECT ECONOMIC ACTIVITY WITHIN THIS STATE'S BORDERS, BY
 REDUCING THE LIKELIHOOD OF A SOVEREIGN DEBT DEFAULT WHICH COULD ADVERSE-
 LY IMPACT THE STATE'S ECONOMY; AND
   7. REDUCE, OUT OF UNIVERSAL HUMAN RIGHTS AND HUMANITARIAN IMPERATIVES,
 THE  SOCIAL  COST  OF  UNRESOLVED  SOVEREIGN  DEBT CRISES IMPOSED ON THE
 PEOPLE OF INSOLVENT NATIONS, ESPECIALLY THE POOREST AMONG  THEM,  TAKING
 DUE ACCOUNT OF CREDITOR RIGHTS.
   § 301. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE:
   1.  "CREDITOR"  MEANS  A  PERSON  OR ENTITY THAT HAS A CLAIM AGAINST A
 STATE;
   2. "CLAIM" MEANS A PAYMENT CLAIM AGAINST A STATE FOR  MONIES  BORROWED
 OR  FOR  THE  STATE'S  GUARANTEE  OF, OR OTHER CONTINGENT OBLIGATION ON,
 MONIES BORROWED; THE TERM "MONIES BORROWED" SHALL INCLUDE THE FOLLOWING,
 WHETHER OR NOT IT REPRESENTS THE BORROWING OF MONEY:  MONIES OWING UNDER
 BONDS; DEBENTURES; NOTES, OR SIMILAR INSTRUMENTS OF ORIGINAL MATURITY OF
 AT LEAST ONE YEAR; MONIES OWING FOR THE DEFERRED PURCHASE PRICE OF PROP-
 ERTY OR SERVICES, OTHER THAN TRADE ACCOUNTS PAYABLE ARISING IN THE ORDI-
 NARY COURSE OF GOVERNMENT OPERATIONS; MONIES OWING ON CAPITALIZED  LEASE
 OBLIGATIONS; MONIES OWING ON OR WITH RESPECT TO LETTERS OF CREDIT, BANK-
 ERS'  ACCEPTANCES, OR OTHER EXTENSIONS OF CREDIT OF ORIGINAL MATURITY OF
 AT LEAST ONE YEAR;
   3. "PLAN" MEANS A DEBT  RESTRUCTURING  PLAN  CONTEMPLATED  BY  SECTION
 THREE HUNDRED FIVE OF THIS ARTICLE;
   4.  "STATE"  MEANS A SOVEREIGN NATION; OR UNINCORPORATED TERRITORY; OR
 ANY SUBNATIONAL UNIT THEREOF, EXCLUDING ANY MUNICIPALITY  WHOSE  ADJUST-
 MENT OR DEBTS IS GOVERNED BY 11 U.S.C. 9; AND
   5. "INDEPENDENT MONITOR" MEANS AN INDIVIDUAL APPOINTED BY THE GOVERNOR
 AND  ACCEPTABLE  TO  THE  SOVEREIGN  DEBTOR AND TO THE HOLDERS, OR THEIR
 AGENTS, OF A MAJORITY OF THE OBLIGATIONS ISSUED UNDER NEW YORK LAW.  THE
 MONITOR  IS  MEANT  TO FACILITATE AND ENCOURAGE AN EFFECTIVE, PROMPT AND
 FAIR AGREEMENT BY THE PARTIES, AS INTENDED BY THIS ARTICLE.
   § 302. PETITION FOR RELIEF; RECOGNITION. 1. A STATE MAY INVOKE  APPLI-
 CATION  OF  THIS  ARTICLE BY FILING A VOLUNTARY PETITION FOR RELIEF WITH
 THE STATE OF NEW YORK.
   2. SUCH PETITION SHALL CERTIFY THAT THE STATE:
   (A) SEEKS RELIEF UNDER THIS ARTICLE, AND  HAS  NOT  PREVIOUSLY  SOUGHT
 RELIEF  UNDER THIS ARTICLE, OR UNDER ANY OTHER LAW THAT IS SUBSTANTIALLY
 IN THE FORM OF THIS ARTICLE, DURING THE PAST TEN YEARS;
   (B) NEEDS RELIEF UNDER THIS ARTICLE TO RESTRUCTURE CLAIMS THAT, ABSENT
 SUCH RELIEF, WOULD CONSTITUTE UNSUSTAINABLE DEBT OF THE STATE;
   (C) AGREES TO RESTRUCTURE THOSE CLAIMS IN ACCORDANCE WITH  THIS  ARTI-
 CLE;
   (D) AGREES TO ALL OTHER TERMS, CONDITIONS AND PROVISIONS OF THIS ARTI-
 CLE;
   (E)  HAS DULY ENACTED ANY NATIONAL OR SUBNATIONAL LAW NEEDED TO EFFEC-
 TUATE THESE AGREEMENTS. IF REQUESTED BY THE  INDEPENDENT  MONITOR,  SUCH
 PETITION  SHALL  ALSO  ATTACH  DOCUMENTS  AND  LEGAL OPINIONS EVIDENCING
 COMPLIANCE WITH THIS PARAGRAPH; AND
   (F) IS COOPERATING WITH THE INTERNATIONAL MONETARY FUND TO  DEVISE  AN
 EFFECTIVE, EFFICIENT, TIMELY AND FAIR PATH BACK TO SUSTAINABILITY.
 A. 2102--A                          3
 
   3. IMMEDIATELY AFTER SUCH A PETITION FOR RELIEF HAS BEEN FILED, AND SO
 LONG  AS  SUCH  FILING HAS NOT BEEN DISMISSED BY THE INDEPENDENT MONITOR
 FOR LACK OF GOOD FAITH, THE TERMS, CONDITIONS, AND  PROVISIONS  OF  THIS
 ARTICLE SHALL:
   (A)  APPLY  TO  THE DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE STATE AND
 ITS CREDITORS TO THE EXTENT SUCH RELATIONSHIP IS GOVERNED BY THE LAW  OF
 THIS JURISDICTION;
   (B)  APPLY  TO  THE DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE STATE AND
 ITS CREDITORS TO THE EXTENT SUCH RELATIONSHIP IS GOVERNED BY THE LAW  OF
 ANOTHER  JURISDICTION  THAT HAS ENACTED LAW SUBSTANTIALLY IN THE FORM OF
 THIS ARTICLE; AND
   (C) BE RECOGNIZED IN,  AND  BY,  ALL  OTHER  JURISDICTIONS  THAT  HAVE
 ENACTED LAW SUBSTANTIALLY IN THE FORM OF THIS ARTICLE.
   §  303. NOTIFICATION OF CREDITORS.  1. WITHIN THIRTY DAYS AFTER FILING
 ITS PETITION FOR RELIEF, THE STATE SHALL NOTIFY ALL OF ITS KNOWN  CREDI-
 TORS OF ITS INTENTION TO NEGOTIATE A PLAN UNDER THIS ARTICLE.
   2.  THE  INDEPENDENT MONITOR SHALL PREPARE AND MAINTAIN A CURRENT LIST
 OF CREDITORS OF THE STATE AND VERIFY CLAIMS FOR THE PURPOSES  OF  SUPER-
 VISING VOTING UNDER THIS ARTICLE.
   §  304.   DEBT RECONCILIATION. THE CREDITOR CLAIMS SHALL BE RECONCILED
 AGAINST DEBTOR RECORDS AND ANY DISCREPANCIES SHALL BE ADDRESSED  BETWEEN
 THE PARTIES.
   §  305.  SUBMISSION,  CONTENTS  AND  VOTING  ON PLAN. 1. THE STATE MAY
 SUBMIT A PLAN TO ITS CREDITORS AT ANY TIME, AND MAY  SUBMIT  ALTERNATIVE
 PLANS FROM TIME TO TIME.
   2. NO OTHER PERSON OR ENTITY MAY SUBMIT A PLAN ON BEHALF OF THE STATE.
   3. A PLAN SHALL:
   (A)  DESIGNATE CLASSES OF CLAIMS IN ACCORDANCE WITH SUBDIVISION SIX OF
 THIS SECTION;
   (B) SPECIFY THE PROPOSED TREATMENT OF EACH CLASS OF CLAIMS;
   (C) PROVIDE THE SAME TREATMENT FOR EACH CLAIM OF A  PARTICULAR  CLASS,
 UNLESS THE HOLDER OF A CLAIM AGREES TO A LESS FAVORABLE TREATMENT;
   (D) DISCLOSE ANY CLAIMS NOT INCLUDED IN THE PLAN'S CLASSES OF CLAIMS;
   (E)  PROVIDE  ADEQUATE  MEANS FOR THE PLAN'S IMPLEMENTATION INCLUDING,
 WITH RESPECT TO ANY CLAIMS, CURING OR WAIVING ANY DEFAULTS  OR  CHANGING
 THE  MATURITY  DATES, PRINCIPAL AMOUNT, INTEREST RATE, OR OTHER TERMS OR
 CANCELING OR MODIFYING ANY LIENS OR ENCUMBRANCES; AND
   (F) CERTIFY THAT, IF THE PLAN BECOMES EFFECTIVE  AND  BINDING  ON  THE
 STATE  AND  ITS  CREDITORS  UNDER  SUBDIVISION FOUR OF THIS SECTION, THE
 STATE'S DEBT WILL BECOME SUSTAINABLE.
   4. A PLAN SHALL BECOME EFFECTIVE AND BINDING  ON  THE  STATE  AND  ITS
 CREDITORS  WHEN IT HAS BEEN SUBMITTED BY THE STATE AND AGREED TO BY EACH
 CLASS OF SUCH CREDITORS' CLAIMS DESIGNATED IN THE PLAN UNDER SUBDIVISION
 THREE OF THIS SECTION. THEREUPON, THE STATE SHALL BE DISCHARGED FROM ALL
 CLAIMS INCLUDED IN THOSE CLASSES OF CLAIMS, EXCEPT AS  PROVIDED  IN  THE
 PLAN.
   5.  A  CLASS  OF  CLAIMS  HAS AGREED TO A PLAN IF CREDITORS HOLDING AT
 LEAST TWO-THIRDS IN AMOUNT AND MORE  THAN  ONE-HALF  IN  NUMBER  OF  THE
 CLAIMS OF SUCH CLASS VOTING ON SUCH PLAN AGREE TO THE PLAN.
   6. EACH CLASS OF CLAIMS SHALL CONSIST OF CLAIMS AGAINST THE STATE THAT
 ARE EQUAL IN PRIORITY, PROVIDED THAT:
   (A) EQUAL CLAIMS NEED NOT ALL BE INCLUDED IN THE SAME CLASS;
   (B)  CLAIMS  OF  GOVERNMENTAL  OR  MULTI-GOVERNMENTAL ENTITIES HOLDING
 CLAIMS DEFINED UNDER THIS ARTICLE SHALL BE INCLUDED WITH THE  CLAIMS  OF
 PRIVATE  HOLDERS  OF  SUCH CLAIMS, AND EACH SHALL BE CLASSED SEPARATELY;
 AND
 A. 2102--A                          4

   (C) CLAIMS THAT ARE GOVERNED BY THIS ARTICLE OR  THE  LAW  OF  ANOTHER
 JURISDICTION THAT IS SUBSTANTIALLY IN THE FORM OF THIS ARTICLE SHALL NOT
 BE CLASSED WITH OTHER CLAIMS.
   § 306. FINANCING THE RESTRUCTURING. 1. SUBJECT TO SUBDIVISION THREE OF
 THIS  SECTION  THE  STATE  SHALL  HAVE THE RIGHT TO BORROW MONEY ON SUCH
 TERMS AND CONDITIONS AS IT DEEMS APPROPRIATE.
   2. THE STATE SHALL NOTIFY ALL OF ITS KNOWN CREDITORS OF ITS  INTENTION
 TO  BORROW  UNDER  SUBDIVISION ONE OF THIS SECTION, THE TERMS AND CONDI-
 TIONS OF THE BORROWING, AND THE PROPOSED USE OF THE LOAN PROCEEDS.  SUCH
 NOTICE  SHALL  ALSO DIRECT THOSE CREDITORS TO RESPOND TO THE INDEPENDENT
 MONITOR WITHIN THIRTY DAYS AS TO WHETHER THEY APPROVE OR  DISAPPROVE  OF
 SUCH LOAN.
   3.  ANY SUCH LOAN SHALL BE APPROVED BY CREDITORS HOLDING AT LEAST TWO-
 THIRDS IN AMOUNT OF THE CLAIMS OF CREDITORS RESPONDING TO THE  INDEPEND-
 ENT MONITOR WITHIN THAT THIRTY-DAY PERIOD.
   4.  IN ORDER FOR THE PRIORITY OF REPAYMENT, AND CORRESPONDING SUBORDI-
 NATION, UNDER SECTION THREE HUNDRED SEVEN OF THIS ARTICLE TO  BE  EFFEC-
 TIVE,  ANY SUCH LOAN SHALL ADDITIONALLY BE APPROVED BY CREDITORS HOLDING
 AT LEAST TWO-THIRDS IN PRINCIPAL AMOUNT OF THE  COVERED  CLAIMS  OF  THE
 CREDITORS  RESPONDING  TO THE INDEPENDENT MONITOR WITHIN THAT THIRTY-DAY
 PERIOD. CLAIMS SHALL BE DEEMED TO BE COVERED IF  THEY  ARE  GOVERNED  BY
 THIS ARTICLE OR BY THE LAW OF ANOTHER JURISDICTION THAT IS SUBSTANTIALLY
 IN THE FORM OF THIS ARTICLE.
   §  307. PRIORITY OF REPAYMENT. 1. THE STATE SHALL REPAY LOANS APPROVED
 UNDER THIS ARTICLE PRIOR TO PAYING ANY OTHER CLAIMS.
   2. THE CLAIMS OF CREDITORS OF THE STATE ARE SUBORDINATED TO THE EXTENT
 NEEDED TO EFFECTUATE THE PRIORITY PAYMENT  UNDER  THIS  SECTION.    SUCH
 CLAIMS ARE NOT SUBORDINATED FOR ANY OTHER PURPOSE.
   3.  THE  PRIORITY  OF  PAYMENT, AND CORRESPONDING SUBORDINATION, UNDER
 THIS SECTION IS EXPRESSLY SUBJECT TO THE  APPROVAL  BY  CREDITORS  UNDER
 SUBDIVISION FOUR OF SECTION THREE HUNDRED SIX OF THIS ARTICLE.
   §  308. ADJUDICATION OF DISPUTES.  THE INDEPENDENT MONITOR MAY REQUEST
 THAT A COURT OF COMPETENT JURISDICTION APPOINT A REFEREE  OR  A  SPECIAL
 MASTER  TO MAKE RECOMMENDATIONS TO THE COURT REGARDING THE RESOLUTION OF
 ANY DISPUTES ARISING UNDER THIS ARTICLE.
   § 309. APPLICATION; OPT IN. 1. THIS ARTICLE APPLIES WHERE, BY CONTRACT
 OR OTHERWISE;
   (A) THE LAW OF NEW YORK STATE GOVERNS THE DEBTOR-CREDITOR RELATIONSHIP
 BETWEEN A STATE AND ITS CREDITORS; AND
   (B) THE APPLICATION OF THIS ARTICLE  IS  INVOKED  IN  ACCORDANCE  WITH
 SECTION THREE HUNDRED TWO OF THIS ARTICLE.
   2.  WHERE  THIS  ARTICLE  APPLIES, IT SHALL OPERATE RETROACTIVELY AND,
 WITHOUT  LIMITING  THE  FOREGOING,  SHALL   OVERRIDE   ANY   CONTRACTUAL
 PROVISIONS THAT ARE INCONSISTENT WITH THE PROVISIONS OF THIS ARTICLE.
   3.  ANY CREDITORS OF THE STATE WHOSE CLAIMS ARE NOT OTHERWISE GOVERNED
 BY THIS ARTICLE MAY CONTRACTUALLY OPT IN TO THIS ARTICLE'S TERMS, CONDI-
 TIONS, AND PROVISIONS.
   4. THE TERMS, CONDITIONS, AND PROVISIONS OF THIS ARTICLE  SHALL  APPLY
 TO  THE  DEBTOR-CREDITOR  RELATIONSHIP  BETWEEN  THE STATE AND CREDITORS
 OPTING IN UNDER SUBDIVISION ONE OF THIS SECTION AS IF SUCH  RELATIONSHIP
 WERE  GOVERNED  BY THE LAWS OF NEW YORK STATE UNDER SUBDIVISION THREE OF
 SECTION THREE HUNDRED TWO OF THIS ARTICLE.
   § 2. This act shall take effect immediately.