NY State Senate Bill 2023-S4747

Current Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to judiciary
Feb 14, 2023	referred to judiciary

co-Sponsors

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2023-S4747 (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: Debtor and Creditor Law
Laws Affected:: Add Art 10-B §§287-a - 287-b, D & C L

2023-S4747 (ACTIVE) - Summary

Relates to New York state's support of international debt relief initiatives for certain developing countries.

2023-S4747 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S4747

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the debtor and creditor law, in relation to the recover-
ability of sovereign debt

 
PURPOSE:

To promote effective and orderly sovereign debt restructuring for coun-
tries suffering from the pandemic, health, and economic crises, achieve
equitable burden-sharing between public and private creditors, address
economic and supply chain shocks, prevent financial system disruption,
and protect NY taxpayers.

 
SUMMARY OF PROVISIONS:

Section 1. Lists legislative findings and intent. It establishes New
York's interest, as a leading financial center and sovereign debt issu-
ance and trading market, in promoting effective resolution of sovereign
debt crises with sustainable outcomes. It explains how equitable

burden-sharing among public and private creditors is essential to the
effectiveness of such initiatives. It further addresses the stake for
New Yorkers, as they pay federal and state taxes that enable United
States participation in such initiatives, and mitigates the impact on
New Yorkers affected by financial disruptions stemming from humanitarian
and debt crises in developing countries.

Section 2. Adds new article 10-B to the Debtor and Creditor Law.
Defines the international debt initiatives the United States supports,
the debt claims to which the legislation will apply, the eligible debtor
states, and the standards for equitable burden-sharing among all credi-
tors embedded in international debt initiatives.

Then this section mandates that debt claims for countries participating
in international debt initiatives against eligible debtor states will
only be recoverable to the extent they meet burden-sharing standards,
and robust disclosure criteria, and not exceed the proportion that would
have been recoverable by the US government had it been the creditor
holding such claim.

 
JUSTIFICATION:

Orderly and effective sovereign debt relief for developing countries
with unsustainable levels of debt is the longstanding policy of the US
and of the State of New York as a leading financial center. The US-led
and participated in multiple such initiatives over the years.  The bill
will make such debt relief initiatives more effective by ensuring
private creditors participate alongside public creditors on comparable
terms.

The bill will protect taxpayers by blocking tax money that funds US
contributions to debt relief initiatives from funding bailouts of
private creditors, and ensuring it supports spending on health (e.g.
coronavirus vaccines and treatments), education, and other services for
the most vulnerable in debtor countries. Making debt relief provision
more rapid and efficient will reduce shocks that disrupt supply chains
and trade partnerships on which New York and the US economy and consum-
ers rely. The bill will support international financial system stabili-
ty, critical to prosperity in NY's financial center. Without burden-
sharing among public and private creditors, public creditors will find
it increasingly harder to support the legitimacy of debt relief, raising
questions about the viability of debt restructuring and compromising the
international financial system.

Because New York is the primary issuance and governing jurisdiction for
developing market bonds, it is best placed to make the required legisla-
tive actions.

The state has the prerogative to act in order to guarantee the smooth
functioning of available mechanisms for avoiding, mitigating, or resolv-
ing international debt and associated humanitarian crises. When such
crises occur, they have a knock-on effect on the state's taxpayers and
consumers, and their effects on financial markets and payment systems
disproportionately affect its economy, so the state has a legitimate
interest in facilitating their prompt resolution.

 
LEGISLATIVE HISTORY:

A10595 2021-22

 
FISCAL IMPLICATIONS:

Nominal.

 
EFFECTIVE DATE:
This act shall take effect immediately after it shall have become a law.

2023-S4747 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4747
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 14, 2023
                                ___________
 
 Introduced  by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
   when printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the debtor and creditor law, in relation to the recover-
   ability of sovereign debt
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative findings and intent. The legislature finds that
 it  is  a  longstanding policy of the United States and the state of New
 York, as the world's  leading  financial  center,  to  support  orderly,
 collaborative  and  effective  international  debt relief for developing
 countries with unsustainable levels of debt. Debt distress, debt crises,
 and disorderly default are associated with unacceptable human suffering,
 economic decline, and financial market and payment  systems  disruption.
 Moreover,  debt  restructuring  is  ineffective  and  does  not  lead to
 sustainable outcomes when it is not perceived as equitable or legitimate
 by stakeholders in borrowing and lending countries. Additionally, public
 creditors are unlikely to participate in debt restructuring  initiatives
 unless  there is fair burden sharing among all public and private credi-
 tors, which is essential to the legitimacy  and  effectiveness  of  debt
 relief  initiatives.  The  United  Kingdom  has successfully implemented
 legislation to promote such burden-sharing in support  of  international
 debt relief initiatives since 2010. Therefore, the legislature finds and
 declares that it shall be the policy of the state of New York to support
 international debt relief initiatives for developing countries in, or at
 high risk of, debt distress, to ensure that the cost of such debt relief
 is  allocated in a fair and equitable manner, and that such costs do not
 fall disproportionately on the residents and taxpayers of the  state  of
 New York, and for other purposes.
   §  2.  The  debtor and creditor law is amended by adding a new article
 10-B to read as follows:

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04458-01-3
 S. 4747                             2

 
                               ARTICLE 10-B
                     RECOVERABILITY OF SOVEREIGN DEBT
 SECTION 287-A. DEFINITIONS.
         287-B. RECOVERABILITY OF ELIGIBLE CLAIMS.
   §  287-A.  DEFINITIONS.  AS  USED IN THIS ARTICLE, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1. "INTERNATIONAL INITIATIVE" MEANS ANY MECHANISM, FRAMEWORK OR INITI-
 ATIVE IN WHICH THE UNITED STATES GOVERNMENT AND OTHER  SOVEREIGN  STATES
 HAVE  ENGAGED WITH INTERNATIONAL FINANCIAL INSTITUTIONS AND OFFICIAL AND
 COMMERCIAL CREDITORS TO ADVANCE THE IMPLEMENTATION  AND  IMPROVEMENT  OF
 PROMPT  AND  EFFECTIVE  DEBT RELIEF AMONG ELIGIBLE STATES, INCLUDING BUT
 NOT LIMITED TO THE HEAVILY INDEBTED POOR  COUNTRIES  INITIATIVE  OF  THE
 INTERNATIONAL MONETARY FUND AND THE WORLD BANK, THE DEBT SERVICE SUSPEN-
 SION INITIATIVE OF THE GROUP OF 20, THE COMMON FRAMEWORK FOR DEBT TREAT-
 MENTS  BEYOND  THE  DSSI,  ALSO KNOWN AS THE "COMMON FRAMEWORK", AND ANY
 SUCCESSOR OR SIMILAR INTERNATIONAL MECHANISM, FRAMEWORK OR INITIATIVES.
   2. "ELIGIBLE CLAIM" SHALL MEAN A PAYMENT CLAIM FOR BORROWED  MONEY,  A
 GUARANTEE  OR  SIMILAR  OBLIGATION  WITH  RESPECT TO BORROWED MONEY, ANY
 DEBT-EQUIVALENT CLAIM, AND ANY DOMESTIC OR FOREIGN JUDGMENT WITH RESPECT
 TO SUCH A CLAIM AGAINST AN ELIGIBLE STATE PARTICIPATING IN ONE  OR  MORE
 OF THE INTERNATIONAL INITIATIVES.
   3.  "ELIGIBLE  STATE" SHALL MEAN A SOVEREIGN STATE ELIGIBLE TO PARTIC-
 IPATE IN ONE OR MORE OF THE INTERNATIONAL INITIATIVES.
   4. "BURDEN-SHARING STANDARDS" SHALL MEAN STANDARDS SET BY THE RELEVANT
 INTERNATIONAL INITIATIVE  OR  INTERNATIONAL  INITIATIVES  FOR  EQUITABLE
 BURDEN-SHARING  AMONG ALL CREDITORS WITH MATERIAL CLAIMS ON EACH PARTIC-
 IPATING DEBTOR WITHOUT REGARD FOR THEIR  OFFICIAL,  PRIVATE,  OR  HYBRID
 STATUS.
   §  287-B.  RECOVERABILITY  OF  ELIGIBLE  CLAIMS.  ANY  ELIGIBLE  CLAIM
 INCURRED PRIOR TO THE DATE OF AN ELIGIBLE STATE'S APPLICATION TO PARTIC-
 IPATE IN ONE OR MORE INTERNATIONAL INITIATIVES SHALL ONLY  BE  RECOVERA-
 BLE:
   1. TO THE EXTENT THAT IT COMPORTS WITH BURDEN-SHARING STANDARDS;
   2. PROVIDED IT MEETS ROBUST DISCLOSURE STANDARDS, INCLUDING INTER-CRE-
 DITOR DATA SHARING AND A BROAD PRESUMPTION IN FAVOR OF PUBLIC DISCLOSURE
 OF MATERIAL TERMS AND CONDITIONS OF SUCH CLAIMS; AND
   3.  UP  TO  THE  PROPORTION OF THE ELIGIBLE CLAIM THAT WOULD HAVE BEEN
 RECOVERABLE BY THE UNITED STATES FEDERAL GOVERNMENT UNDER THE APPLICABLE
 INTERNATIONAL INITIATIVE IF THE UNITED  STATES  FEDERAL  GOVERNMENT  HAD
 BEEN THE CREDITOR HOLDING THE ELIGIBLE CLAIM.
   § 3. This act shall take effect immediately.

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Senate Bill S4747

Sponsored By

Current Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

2023-S4747 (ACTIVE) - Details

2023-S4747 (ACTIVE) - Summary

2023-S4747 (ACTIVE) - Sponsor Memo

2023-S4747 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S4747

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Sponsored By

Current Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

2023-S4747 (ACTIVE) - Details

2023-S4747 (ACTIVE) - Summary

2023-S4747 (ACTIVE) - Sponsor Memo

2023-S4747 (ACTIVE) - Bill Text download pdf

Comments