NY State Senate Bill 2023-S5542A

Current Bill Status - In Senate Committee Banks 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

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 28, 2024	print number 5542a
Feb 28, 2024	amend (t) and recommit to banks
Jan 03, 2024	referred to banks
Mar 08, 2023	referred to banks

Bill Amendments

Original

A (Active)

co-Sponsors

View additional co-sponsors

2023-S5542 - Details

See Assembly Version of this Bill:: A2970
Current Committee:: Senate Banks
Law Section:: Debtor and Creditor Law
Laws Affected:: Add Art 8 §§220 - 232, D & C L
Versions Introduced in 2021-2022 Legislative Session:: S6627, A10595

2023-S5542 - Summary

Provides for restructuring unsustainable sovereign and subnational debt; provides a voluntary petition for relief may be filed with the state.

2023-S5542 - Sponsor Memo

                                 
BILL NUMBER: S5542

SPONSOR: RIVERA
 
TITLE OF BILL:

An act to amend the banking law, in relation to restructuring unsustain-
able sovereign and subnational debt

 
PURPOSE:

To effectively restructure unsustainable Sovereign and Subnational debt
to strengthen the role of New York to issue and trade sovereign debt and
reduce the need for bailouts, negative social costs, systemic risk to
the economy, and creditor uncertainty.

 
SUMMARY OF PROVISIONS:

Section 1 of this legislation the banking law is amended to add a new
Article 7, which includes sections 300-309.

Section 300 provides the legislative intent for this article.

Section 301 provides definitions of "creditor," "claim," "plan,"
"state," and "independent monitor" for the purpose of this article.

Section 302 provides for the petition of relief and recognition which
authorizes the state to file a voluntary petition for relief with the
independent monitor. This relief is certified albeit that the state has
not previously sought relief under this article within the past 10
years, that not receiving relief would place an unsustainable burden of
debt on the state, the state agrees to restructure claims in accordance
with this article, the state agrees to all terms, conditions, and
provisions of the article, and that the state has enacted any national
or subnational law needed to catalyze the agreements. After a petition
has been filed, the terms, conditions, and provisions of the article
shall apply to the debtor-creditor relationship between the state and
its creditors of this jurisdiction, another jurisdiction, and all other
jurisdictions that have enacted the law sufficiently to this article.

Section 303 provides for the notification of intention to creditors and
approves that the state shall notify all of its known creditors within
30 days of filing its petition for relief, with the independent monitor
verifying the state's list of current creditors.

Section 304 provides for the debt reconciliation process to be
conducted, whereby the creditor's claims will be reconciled against
debtor's records.

Section 305 provides for the submission, contents, and voting on a plan.
A plan shall designate classes of claims, specify the proposed treatment
of each class of claims, provide the same treatment for all claims,
disclose any claims not included, provide means for the plan's implemen-
tation, and certify that if the plan becomes effective on the state and
its creditors, that the state's debt will become sustainable. This plan
will become binding on the state and its creditors when it has been
submitted and agreed upon by each class of the creditors' claims. The
state will then be discharged from all claims included in the classes of
claims. The claims can only be agreed to if the creditors hold at least

two-thirds in amount and more than one-half in number of the claims.
Each class of claims shall also be of equal priority to the state.

Section 306 provides for financing the restructuring. The state shall
have the right to borrow money if the terms and conditions deem it
appropriate. The state must notify all of its known creditors and the
creditors must respond to the independent monitor within 30 days of
notification. Any such loan must be approved by the creditors holding at
least two-thirds in principal amount of the covered claims of the credi-
tors responding to the independent monitor.

Section 307 provides for the priority of repayment. The state shall
repay loans lent under this article prior to any other claims and the
priority of payment shall be approved by the state's known creditors.

Section 308 provides for the adjudication of disputes and states that
the independent monitor may request that a court of competent jurisdic-
tion appoint a referee or special master to make recommendations for the
resolution of disputes.

Section 309 provides for application and opt-in, which applies that the
law governs the debtor-creditor relationship between a state and its
creditors. This article shall operate retroactively, overriding any
contractual provisions that are not consistent with the article and any
creditors of the state whose claims are not governed by the article may
opt in to the articles terms, conditions, and provisions.

Section 2 of the bill provides for the effective date.

 
JUSTIFICATION:

Nation states and subnational territories across the world have found
themselves mired in debt that they are unable to pay. Unlike individuals
and corporations, countries and subnational territories in the United
States cannot use bankruptcy law to restructure unsustainable debt.
Instead, they are forced to negotiate each of their debt contracts indi-
vidually, which often fails as it requires unanimity by various debt
holders. The absence of a predictable, orderly, and rapid process for
restructuring sovereign debt has created a "Wild Wild West" system,
hurting debtor nations, their citizens, and their creditors, while also
posing serious systemic threats to the international financial system.

Approximately half of sovereign debt contracts are governed by New York
law. Because New York has no financial and legal architecture governing
sovereign debt contracts, its power is being superseded by a few bad
faith actors who are exploiting a void in the State's legal system to
engage in destabilizing and speculative behavior. This jeopardizes the
functioning of sovereign lending markets and the authority of New York
State.

Although attempts have been made to try to bypass the unanimity require-
ment in sovereign debt contracts by including so-called collective
action clauses, many contracts still lack them.  Furthermore, most
collective action clauses only bind a party to the particular contract
that includes it. Herein emerges one of the central challenges in sover-
eign debt restructuring known as "the holdout problem"-- a type of
collective action problem where certain creditors, such as vulture funds
that may have bought debt in the secondary market for a steep discount,
sue to receive full payment by refusing to agree to a debt restructuring
plan that proposes to change critical terms, even though the other debt
holders consider the plan reasonable.

These tactics delay the finalization of a restructuring plan, leading to
inequities between creditors while posing severe consequences for debtor
nations. Unsustainable debt burdens that are unresolved for a prolonged
period of time can lead to sovereign nations losing access to the credit
market, hampering their ability to provide for their population's most
basic needs.

Most recently, vulture funds are engaging in these predatory practices
in Puerto Rico, where they have attempted to co-opt debt restructuring
proceedings to make huge profits while the people of Puerto Rico contin-
ue to be hit with austerity measures. The human cost of protracted debt
restructuring processes has also led to everything from famines in the
Congo to a sustained economic depression in Argentina, where vulture
funds were allowed to extract ransom money by buying debt claims to
block the ability of majority creditors to reach a settlement. Judicial
decisions like these, issued by a federal court interpreting New York
law, threaten New York's dominance as the law that governs sovereign
debt contracts.

Because of its role in the sovereign debt market, New York is uniquely
positioned to help solve the sovereign debt crisis and preserve its
dominance through the model law. The model law would create a systematic
legal resolution framework for helping debtor states restructure unsus-
tainable debt. The proposed legislation would address the holdout prob-
lem by legally mandating supermajority voting that can bind dissenting
creditors. Contracts that now require unanimity for revisions could be
amended to allow changes that are approved by at least a supermajority
of similarly situated creditors (even if those creditors' claims arise
under different debt contracts); such a law would overcome the major
hurdle to sovereign debt restructuring. That, in turn, would give strug-
gling nations and subnational territories the real prospect of equitably
restructuring their debt to sustainable levels, thereby lowering sover-
eign borrowing costs and increasing creditor confidence by reducing
uncertainty.

Absent an actual federal treaty, New York has the right and responsibil-
ity to fill this clear legal void. Even though the model law could
retroactively impair contract rights, any impairment would be a reason-
able exercise of the state's police powers to protect its economy --
reducing the likelihood that a country-debt default could trigger a
systemic collapse, as occurred in 2008 when mortgage-debt defaults trig-
gered a global economic meltdown. Because any impairment must be volun-
tarily agreed to by a "supermajority" of creditors, such a law would
preserve reasonable contractual expectations based on what creditors
then realistically expect to receive as payment.

Additional key aspects of the legislation include, but are not limited
to: addressing the critical need for financially troubled debtor states
to obtain liquidity during their restructuring process by giving new-mo-
ney lenders priority over existing creditors and establishing an inde-
pendent monitor.

This is a financially powerful opportunity for New York. Never before
has a U.S. state had the power to influence the international community
to such an extent. Circumstances have given New York State the astonish-
ing ability to make history by establishing an orderly sovereign debt
resolution procedure under the rule of law. New York would benefit as
would the global community. This extraordinary opportunity is too impor-
tant for the state to ignore.

 
PRIOR LEGISLATIVE HISTORY:

2021-2022: S6627/A7562 Davila

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect on the 180th day after it shall have become a
law.

2023-S5542 - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5542
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               March 8, 2023
                                ___________
 
 Introduced  by  Sens.  RIVERA, BRISPORT, CLEARE, GIANARIS, MYRIE, RAMOS,
   SALAZAR, SANDERS -- read twice and ordered printed, and  when  printed
   to be committed to the Committee on Banks
 
 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;
   3. REDUCE CREDITOR UNCERTAINTY, INCLUDING TO THE NUMEROUS  HOLDERS  OF
 SOVEREIGN DEBT THAT ARE RESIDENTS IN THIS STATE;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02418-03-3
 S. 5542                             2

 
   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.
   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
 S. 5542                             3
 
 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
 S. 5542                             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.

co-Sponsors

View additional co-sponsors

2023-S5542A (ACTIVE) - Details

See Assembly Version of this Bill:: A2970
Current Committee:: Senate Banks
Law Section:: Debtor and Creditor Law
Laws Affected:: Add Art 8 §§220 - 232, D & C L
Versions Introduced in 2021-2022 Legislative Session:: S6627, A10595

2023-S5542A (ACTIVE) - Summary

Provides for restructuring unsustainable sovereign and subnational debt; provides a voluntary petition for relief may be filed with the state.

2023-S5542A (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S5542A     Revised 3/1/24

SPONSOR: RIVERA
 
TITLE OF BILL:

An act to amend the debtor and creditor law, in relation to restructur-
ing unsustainable sovereign and subnational debt

 
PURPOSE:

This bill provides effective and orderly mechanisms for restructuring
sovereign and subnational debt for foreign governments and US territo-
ries against which there are one or more claims governed by or enforced
under New York law. The bill seeks to encourage constructive resolution
of debtor-creditor disputes under New York law, ensure that access to
New York courts is not abused by holdout creditors, encourage equitable
burden sharing between public and private creditors, address economic
and supply chain shocks, prevent financial system disruption, and
protect New York taxpayers and cooperating investors.

 
SUMMARY OF PROVISIONS:

Section 1 names this act the Sovereign Debt Stability Act.

Section 2 creates a new article 8 under debtor creditor law. The bill
allows foreign government and US territory creditors under New York law
to select one of two mechanisms to ensure New York State's laws facili-
tate orderly and efficient restructuring of distressed debt.  One mech-
anism is defined by Sections 222-229, and the other is defined by
Section 230.

Section 220 establishes the legislative intent.

Section 221 sets definitions for the following terms: "creditor,"
"claim," "plan," "debtor state," "independent monitor," "international
initiative," "eligible claim," "burden-sharing standards," "section 223
claim," and "section 230 claim."

Section 222 establishes a process by which debtor states can file notice
with New York to be covered under section 223 claims or section 230
claims. The debtor state is allowed to change their claim choice once
before any plan becomes binding.

Section 223 considers claim notifications a voluntary petition for
relief as long as the debtor state certifies that it has not sought
substantially similar relief within the past five years and that relief
is needed to address unsustainable debt; agrees to restructure claims
and to all other terms between section 223-229 of this article; has
enacted any national or subnational law needed to effectuate the agree-
ments; and lastly, is cooperating with the International Monetary Fund
to establish sustainability.

Section 224 requires the debtor state to notify creditors of their
intention to negotiate a plan under a section 223 claim and has the
independent monitor maintain and verify a list of current creditors of
the debtor state. The independent monitor shall be acceptable to the
debtor state and the majority of creditors.


Section 225 requires debtor states and creditors to ensure records are
accurate and discrepancies are addressed amongst each other.

Section 226 allows the debtor state to submit a plan to its creditors
that designates different classes of claims and how each claim will be
restructured. The plan must include the same treatment of each class of
claims, disclosing of claims excluded from the classes of claims,
adequate means for implementation, and certification that the plan will
make the debtor state's debt sustainable. The plan must be approved
through supermajority voting by each class of creditors.

Section 227 allows the debtor state to borrow to implement the restruc-
turing plan and allows creditors to report to the independent monitor
whether or not they agree with the borrowing terms. Such a loan must be
approved by the creditors that hold at least two-thirds in amount of the
claims.

Section 228 provides guidance on how the debtor state shall repay their
loans and claims in accordance to approval by creditors with two-thirds
in principal amount of the covered claims.

Section 229 allows the independent monitor to request a referee or
special master to make recommendations on resolution of disputes for
section 223 claims.

Section 230 allows debtor states in cases where there is an interna-
tional debt restructuring initiative, to prevent creditors from having
access to New York courts to enforce claims in excess of the proportion
that would have been recoverable by the US government had it been the
creditor holding such claim. Section 230 also requires that any restruc-
turing initiative meet burden-sharing standards and robust disclosure
criteria.

Section 231 allows the restructuring for debtor states that are sover-
eign nations to be retroactive.

Section 232 establishes a severability clause. If any provisions of the
bill are held invalid, this invalidity does not affect other provisions
which can be implemented without the invalid provision. If a debtor
state's choice to have claims covered by Sections 222-229 is held inval-
id, another debtor state's choice to have claims covered by Section 230
is still valid, and vice versa.

Section 3 sets the effective date to be immediately.

 
JUSTIFICATION:

It is a longstanding policy of the State of New York, as the world's
leading financial center, to support orderly, collaborative, and effec-
tive processes for resolving unsustainable debt as part of New York's
debtor-creditor law. It is also the longstanding policy of the United
States government to participate in and support international efforts to
restructure unsustainable sovereign debt. Unlike individuals and corpo-
rations, sovereigns are not subject to liquidation or a standardized
debt restructuring process. This bill will ensure that sovereign debt
entered into under the laws of New York State can be resolved if it
becomes unsustainable, preventing costly disputes conducted in New York
courts. With approximately half of sovereign debt contracts governed by
New York law, the absence of a legal framework in the state allows bad
faith actors to exploit a void in the legal system and take advantage of
cooperative creditors, jeopardizing the functioning of sovereign lending
markets and the authority of New York State.

Unresolved unsustainable debt burdens over a prolonged period can lead
sovereign nations to lose access to the credit market, hampering their
ability to provide for their population's most basic needs.  Making debt
relief provisions more rapid and efficient will reduce shocks that
disrupt supply chains and trade partnerships on which New York,the US
economy, and consumers rely. In addition to ensuring that New York's
courts are not misused, the bill will support the stability of the
international financial system, critical to New York's financial system.

Finally, as a center of global commerce, New York is always affected
when unsustainable sovereign debt leads to humanitarian crises, with
attendant refugee flows, political instability, and economic conse-
quences. When such crises occur, they have a knock-on effect on New
York's taxpayers and consumers. These effects on financial markets and
payment systems disproportionately affect New York's economy; thus, the
state has a legitimate interest in facilitating their prompt resolution

 
LEGISLATIVE HISTORY:

2023 - 2024: S5542 (A print includes S4747 Hoylman-Sigal / A2102A Fahy)

2021-2022: S6627 Rivera / A7562 Davila

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
The act shall take effect immediately after it has become a law.

2023-S5542A (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5542--A
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               March 8, 2023
                                ___________
 
 Introduced  by  Sens.  RIVERA, BRISPORT, CLEARE, COMRIE, GIANARIS, HOYL-
   MAN-SIGAL, KRUEGER, MYRIE, RAMOS, SALAZAR, SANDERS -- read  twice  and
   ordered  printed, and when printed to be committed to the Committee on
   Banks -- recommitted to the Committee  on  Banks  in  accordance  with
   Senate  Rule  6, sec. 8 -- committee discharged, bill amended, ordered
   reprinted as amended and recommitted to said committee
 
 AN ACT to amend the debtor and creditor law, in relation to  restructur-
   ing unsustainable sovereign and subnational debt
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "sovereign debt stability act".
   §  2. The debtor and creditor law is amended by adding a new article 8
 to read as follows:
                                 ARTICLE 8
                      SOVEREIGN AND SUBNATIONAL DEBT
 SECTION 220. LEGISLATIVE INTENT.
         221. DEFINITIONS.
         222. ELECTION TO BE COVERED BY THE PROVISIONS OF THIS ARTICLE.
         223. PETITION FOR RELIEF; RECOGNITION.
         224. NOTIFICATION OF CREDITORS.
         225. DEBT RECONCILIATION.
         226. SUBMISSION, CONTENTS AND VOTING ON PLAN.
         227. FINANCING THE RESTRUCTURING.
         228. PRIORITY OF REPAYMENT.
         229. ADJUDICATION OF DISPUTES.
         230. RECOVERABILITY OF SECTION 230 CLAIMS.
         231. APPLICATION; OPT IN.
         232. SEVERABILITY.
   § 220. LEGISLATIVE INTENT.  THE LEGISLATURE FINDS THAT IT IS  A  LONG-
 STANDING  POLICY  OF THE UNITED STATES AND THE STATE OF NEW YORK, AS THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02418-09-4

 S. 5542--A                          2
 
 WORLD'S LEADING FINANCIAL CENTER, TO SUPPORT ORDERLY, COLLABORATIVE  AND
 EFFECTIVE  INTERNATIONAL SOVEREIGN DEBT RELIEF FOR COUNTRIES WITH UNSUS-
 TAINABLE 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  STAKE-
 HOLDERS  IN BORROWING AND LENDING COUNTRIES. ADDITIONALLY, PUBLIC CREDI-
 TORS 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.  THEREFORE, THE LEGISLATURE FINDS AND DECLARES THAT
 IT SHALL BE THE POLICY OF NEW YORK STATE TO SUPPORT  INTERNATIONAL  DEBT
 RELIEF  INITIATIVES  FOR  COUNTRIES 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 NEW
 YORK STATE, AND FOR OTHER PURPOSES.  THE PURPOSE OF THIS ARTICLE  IS  TO
 PROVIDE EFFECTIVE MECHANISMS FOR RESTRUCTURING SOVEREIGN AND SUBNATIONAL
 DEBT SO AS TO:
   1. REDUCE THE SOCIAL COSTS OF SOVEREIGN AND SUBNATIONAL DEBT CRISES TO
 RESIDENTS OF NEW YORK STATE;
   2.  REDUCE  SYSTEMIC  RISK  TO  THE FINANCIAL SYSTEM, A SYSTEM THAT IS
 CONCENTRATED IN NEW YORK STATE;
   3. REDUCE CREDITOR UNCERTAINTY, INCLUDING TO THE NUMEROUS  HOLDERS  OF
 SOVEREIGN DEBT THAT ARE RESIDENTS IN NEW YORK STATE;
   4. STRENGTHEN THE ROLE OF NEW YORK STATE 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 NEW YORK STATE;
   6.  OTHERWISE  PROTECT  ECONOMIC  ACTIVITY  WITHIN  NEW  YORK  STATE'S
 BORDERS,  BY  REDUCING  THE LIKELIHOOD OF A SOVEREIGN DEBT DEFAULT WHICH
 COULD ADVERSELY IMPACT NEW YORK STATE'S ECONOMY;
   7. REDUCE, OUT OF UNIVERSAL HUMAN RIGHTS AND HUMANITARIAN IMPERATIVES,
 THE SOCIAL COST OF UNRESOLVED  SOVEREIGN  DEBT  CRISES  IMPOSED  ON  THE
 PEOPLE  OF NATIONS WITH UNSUSTAINABLE DEBT, ESPECIALLY THE POOREST AMONG
 THEM, TAKING DUE ACCOUNT OF CREDITOR RIGHTS; AND
   8. ENABLE DEBTOR STATES TO CHOOSE A  DEBT  RESTRUCTURING  OPTION  THAT
 APPROPRIATELY SUITS ITS CIRCUMSTANCES AND NEEDS.
   § 221. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE:
   1.  "CREDITOR"  MEANS  A  PERSON  OR ENTITY THAT HAS A CLAIM AGAINST A
 DEBTOR STATE;
   2. "CLAIM" MEANS A PAYMENT CLAIM AGAINST A  DEBTOR  STATE  FOR  MONIES
 BORROWED  OR  FOR  THE  DEBTOR 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 PROPERTY OR SERVICES, OTHER THAN TRADE ACCOUNTS PAYA-
 BLE ARISING IN THE ORDINARY  COURSE  OF  GOVERNMENT  OPERATIONS;  MONIES
 OWING  ON CAPITALIZED LEASE OBLIGATIONS; MONIES OWING ON OR WITH RESPECT
 TO LETTERS OF CREDIT, BANKERS' ACCEPTANCES, OR OTHER EXTENSIONS OF CRED-
 IT OF ORIGINAL MATURITY OF AT LEAST ONE YEAR;
   3. "PLAN" MEANS A DEBT RESTRUCTURING  PLAN  PURSUANT  TO  SECTION  TWO
 HUNDRED TWENTY-SIX OF THIS ARTICLE;
 S. 5542--A                          3
 
   4. "DEBTOR STATE" MEANS A SOVEREIGN NATION; OR UNINCORPORATED TERRITO-
 RY;  OR  ANY  SUBNATIONAL UNIT THEREOF, EXCLUDING ANY MUNICIPALITY WHOSE
 ADJUSTMENT OR DEBTS IS GOVERNED BY 11 U.S.C. 9;
   5.  "INDEPENDENT  MONITOR" MEANS AN INDIVIDUAL APPOINTED BY THE GOVER-
 NOR, IN CONSULTATION WITH THE UNITED STATES DEPARTMENT OF THE  TREASURY,
 ACCEPTABLE  TO THE SOVEREIGN DEBTOR AND TO THE HOLDERS, OR THEIR AGENTS,
 OF A MAJORITY OF THE OBLIGATIONS ISSUED UNDER NEW YORK  LAW.  THE  INDE-
 PENDENT  MONITOR  IS  MEANT  TO  FACILITATE  AND ENCOURAGE AN EFFECTIVE,
 PROMPT AND FAIR AGREEMENT BY THE PARTIES, AS INTENDED BY  THIS  ARTICLE.
 THE  DEBTOR  STATE  SHALL PAY THE INDEPENDENT MONITOR'S REASONABLE COSTS
 AND EXPENSES;
   6. "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", THE PARIS
 CLUB, AND ANY SUCCESSOR OR SIMILAR INTERNATIONAL MECHANISM, FRAMEWORK OR
 INITIATIVES;
   7. "ELIGIBLE CLAIM" SHALL MEAN A CLAIM AS DEFINED IN  SUBDIVISION  TWO
 OF  THIS  SECTION AND ANY JUDICIAL OR OTHER OFFICIAL DOMESTIC OR FOREIGN
 JUDGMENT WITH RESPECT TO SUCH A CLAIM AGAINST AN ELIGIBLE STATE  PARTIC-
 IPATING IN ONE OR MORE OF THE INTERNATIONAL INITIATIVES;
   8.  "ELIGIBLE  STATE" SHALL MEAN A SOVEREIGN STATE ELIGIBLE TO PARTIC-
 IPATE IN ONE OR MORE OF THE INTERNATIONAL INITIATIVES;
   9. "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;
   10.  "SECTION  223  CLAIM"  SHALL  MEAN,  AS  APPLICABLE, A CLAIM WITH
 RESPECT TO WHICH THE DEBTOR STATE HAS  ELECTED  FOR  ITS  CLAIMS  TO  BE
 COVERED  BY SECTION TWO HUNDRED TWENTY-THREE THROUGH SECTION TWO HUNDRED
 TWENTY-NINE OF THIS ARTICLE; AND
   11. "SECTION 230 CLAIM" SHALL MEAN AN ELIGIBLE CLAIM WITH  RESPECT  TO
 WHICH  THE  DEBTOR STATE ISSUING SUCH CLAIM HAS ELECTED TO BE COVERED BY
 SECTION TWO HUNDRED THIRTY OF THIS ARTICLE, AND NOT  TO  BE  COVERED  BY
 SECTION TWO HUNDRED TWENTY-THREE THROUGH SECTION TWO HUNDRED TWENTY-NINE
 OF THIS ARTICLE INCLUSIVE.
   §  222.  ELECTION  TO BE COVERED BY THE PROVISIONS OF THIS ARTICLE. 1.
 ANY DEBTOR STATE AGAINST WHICH THERE ARE ONE OR MORE CLAIMS GOVERNED  BY
 OR  ENFORCED  UNDER  NEW  YORK  LAW  SHALL  HAVE THE OPTION TO APPLY THE
 PROVISIONS OF THIS ARTICLE TO SUCH CLAIMS BY  FILING  A  NOTICE  THEREOF
 WITH  THE  STATE  OF  NEW  YORK.  IN SUCH NOTICE, THE DEBTOR STATE SHALL
 CHOOSE WHETHER THOSE CLAIMS SHALL, TO THE EXTENT GOVERNED  BY  NEW  YORK
 LAW,  BE  COVERED AS SECTION 223 CLAIMS OR, TO THE EXTENT ENFORCED UNDER
 NEW YORK LAW, AS SECTION 230 CLAIMS. WITHIN  THIRTY  DAYS  AFTER  GIVING
 SUCH  NOTICE,  THE  DEBTOR STATE SHALL NOTIFY THE HOLDERS OF SUCH CLAIMS
 AND THE STATE OF NEW YORK OF ITS CHOICE. IN THE CASE OF A CHOICE TO HAVE
 THOSE CLAIMS BE COVERED AS A SECTION 223 CLAIM, THE DEBTOR  STATE  SHALL
 ALSO MAKE THE CERTIFICATIONS SPECIFIED IN SUBDIVISION TWO OF SECTION TWO
 HUNDRED  TWENTY-THREE  OF THIS ARTICLE.  ANY WAIVER OF THE PROVISIONS OF
 THIS SUBDIVISION SHALL BE INEFFECTIVE.
 S. 5542--A                          4
 
   2. A DEBTOR STATE THAT MAKES A CHOICE UNDER SUBDIVISION  ONE  OF  THIS
 SECTION  SHALL  HAVE  THE  RIGHT TO CHANGE THAT CHOICE ONCE, AT ANY TIME
 PRIOR TO A PLAN BECOMING EFFECTIVE AND BINDING ON THE DEBTOR  STATE  AND
 ITS CREDITORS, BY NOTIFYING THE STATE OF NEW YORK AND THE HOLDERS OF ALL
 CLAIMS AFFECTED BY THAT CHOICE.
   §  223.  PETITION  FOR  RELIEF; RECOGNITION. 1. THE NOTIFICATION UNDER
 SECTION TWO HUNDRED TWENTY-TWO OF THIS ARTICLE  THAT  CLAIMS  AGAINST  A
 DEBTOR  STATE SHALL BE COVERED AS A SECTION 223 CLAIM SHALL CONSTITUTE A
 VOLUNTARY PETITION FOR RELIEF WITH THE STATE OF NEW YORK.
   2. SUCH NOTICE SHALL CERTIFY THAT THE DEBTOR STATE:
   (A) SEEKS RELIEF AS A SECTION 223 CLAIM 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  FIVE
 YEARS;
   (B) NEEDS RELIEF AS A SECTION 223 CLAIM UNDER THIS ARTICLE TO RESTRUC-
 TURE  CLAIMS  THAT,  ABSENT  SUCH RELIEF, WOULD CONSTITUTE UNSUSTAINABLE
 DEBT OF THE DEBTOR STATE;
   (C) AGREES TO RESTRUCTURE THOSE CLAIMS IN ACCORDANCE WITH THIS SECTION
 THROUGH SECTION TWO HUNDRED TWENTY-NINE OF THIS ARTICLE;
   (D) AGREES TO ALL OTHER  TERMS,  CONDITIONS  AND  PROVISIONS  OF  THIS
 SECTION THROUGH SECTION TWO HUNDRED TWENTY-NINE OF THIS ARTICLE;
   (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 SUBDIVISION; AND
   (F) IS COOPERATING WITH THE INTERNATIONAL MONETARY FUND TO  DEVISE  AN
 EFFECTIVE, EFFICIENT, TIMELY AND FAIR PATH BACK TO SUSTAINABILITY.
   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 OR THE DEBTOR STATE HAS NOT  CHANGED  ITS  CHOICE
 UNDER  SUBDIVISION TWO OF SECTION TWO HUNDRED TWENTY-TWO OF THIS ARTICLE
 TO HAVE ITS CLAIMS COVERED BY SECTION  TWO HUNDRED THIRTY OF THIS  ARTI-
 CLE, THE TERMS, CONDITIONS, AND PROVISIONS OF THIS ARTICLE SHALL:
   (A) APPLY TO THE DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE DEBTOR 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 DEBTOR 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.
   §  224. NOTIFICATION OF CREDITORS.  1. WITHIN THIRTY DAYS AFTER FILING
 ITS PETITION FOR RELIEF, THE DEBTOR STATE SHALL NOTIFY ALL OF ITS  KNOWN
 CREDITORS OF ITS INTENTION TO NEGOTIATE A PLAN UNDER SECTION TWO HUNDRED
 TWENTY-THREE THROUGH SECTION TWO HUNDRED TWENTY-NINE OF THIS ARTICLE.
   2.  THE  INDEPENDENT MONITOR SHALL PREPARE AND MAINTAIN A CURRENT LIST
 OF CREDITORS OF THE DEBTOR STATE AND VERIFY CLAIMS FOR THE  PURPOSES  OF
 SUPERVISING  VOTING  UNDER  SECTION  TWO  HUNDRED  TWENTY-THREE  THROUGH
 SECTION TWO HUNDRED TWENTY-NINE OF THIS ARTICLE.
   § 225.  DEBT RECONCILIATION. THE CREDITOR CLAIMS SHALL  BE  RECONCILED
 AGAINST  DEBTOR RECORDS AND ANY DISCREPANCIES SHALL BE ADDRESSED BETWEEN
 THE PARTIES.
   § 226. SUBMISSION, CONTENTS AND VOTING ON PLAN. 1.  THE  DEBTOR  STATE
 MAY  SUBMIT A PLAN TO ITS CREDITORS AT ANY TIME, AND MAY SUBMIT ALTERNA-
 TIVE PLANS FROM TIME TO TIME.
 S. 5542--A                          5
 
   2. NO OTHER PERSON OR ENTITY MAY SUBMIT A PLAN ON BEHALF OF THE DEBTOR
 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
 DEBTOR  STATE  AND ITS CREDITORS UNDER SUBDIVISION FOUR OF THIS SECTION,
 THE DEBTOR STATE'S DEBT WILL BECOME SUSTAINABLE.
   4. A PLAN SHALL BECOME EFFECTIVE AND BINDING ON THE DEBTOR  STATE  AND
 ITS  CREDITORS WHEN IT HAS BEEN SUBMITTED BY THE DEBTOR STATE AND AGREED
 TO BY EACH CLASS OF SUCH CREDITORS' CLAIMS DESIGNATED IN THE PLAN  UNDER
 SUBDIVISION  THREE OF THIS SECTION. THEREUPON, THE DEBTOR 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, WITHOUT
 COUNTING CLAIMS OWNED BY THE DEBTOR STATE OR ENTITIES IT CONTROLS.
   6. EACH CLASS OF CLAIMS SHALL CONSIST OF  CLAIMS  AGAINST  THE  DEBTOR
 STATE THAT ARE EQUAL IN PRIORITY, PROVIDED THAT:
   (A) EQUAL PRIORITY CLAIMS NEED NOT ALL BE INCLUDED IN THE SAME CLASS;
   (B)  CLAIMS  OF  GOVERNMENTAL  OR  MULTI-GOVERNMENTAL ENTITIES HOLDING
 CLAIMS EACH SHALL BE CLASSED SEPARATELY;
   (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; AND
   (D)  THE  FACT THAT A CLAIM ARISES UNDER, OR IS SUPPORTED OR EVIDENCED
 BY, A JUDICIAL OR OTHER OFFICIAL DOMESTIC OR FOREIGN JUDGMENT SHALL  NOT
 IN  AND OF ITSELF MEAN THAT SUCH CLAIM IS NOT EQUAL IN PRIORITY TO OTHER
 CLAIMS.
   § 227. FINANCING THE RESTRUCTURING. 1. SUBJECT TO SUBDIVISION THREE OF
 THIS SECTION THE DEBTOR STATE SHALL HAVE THE RIGHT TO  BORROW  MONEY  ON
 SUCH TERMS AND CONDITIONS AS IT DEEMS APPROPRIATE.
   2.  THE  DEBTOR  STATE  SHALL NOTIFY ALL OF ITS KNOWN CREDITORS OF ITS
 INTENTION TO BORROW UNDER SUBDIVISION ONE OF THIS SECTION, THE TERMS AND
 CONDITIONS OF THE BORROWING, AND THE PROPOSED USE OF THE LOAN  PROCEEDS.
 SUCH  NOTICE  SHALL  ALSO DIRECT THOSE CREDITORS TO RESPOND TO THE INDE-
 PENDENT MONITOR WITHIN THIRTY DAYS AS TO WHETHER THEY APPROVE OR  DISAP-
 PROVE 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 TWO HUNDRED TWENTY-EIGHT OF  THIS  ARTICLE  TO  BE
 EFFECTIVE,  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
 S. 5542--A                          6
 
 THIS ARTICLE OR BY THE LAW OF ANOTHER JURISDICTION THAT IS SUBSTANTIALLY
 IN THE FORM OF THIS ARTICLE.
   §  228.  PRIORITY  OF REPAYMENT. 1. THE DEBTOR STATE SHALL REPAY LOANS
 APPROVED UNDER SECTION TWO HUNDRED TWENTY-SEVEN OF THIS ARTICLE PRIOR TO
 PAYING ANY OTHER CLAIMS.
   2. THE CLAIMS OF CREDITORS OF THE DEBTOR 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 TWO HUNDRED TWENTY-SEVEN OF THIS ARTICLE.
   §  229. 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 A SECTION 223 CLAIM UNDER THIS ARTICLE.
   § 230. RECOVERABILITY OF SECTION 230 CLAIMS.  ANY  SECTION  230  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 INTERCRED-
 ITOR DATA SHARING AND A BROAD PRESUMPTION IN FAVOR OF PUBLIC  DISCLOSURE
 OF MATERIAL TERMS AND CONDITIONS OF SUCH CLAIMS; AND
   3.    ONLY  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 GOVERN-
 MENT    HAD  BEEN  THE  CREDITOR HOLDING THE ELIGIBLE CLAIM, AND WITHOUT
 REGARD TO DE MINIMIS CLAUSES.
   § 231. APPLICATION; OPT IN. 1.  WHERE THIS ARTICLE APPLIES,  IT  SHALL
 OPERATE  BOTH  RETROACTIVELY AND PROSPECTIVELY AND, WITHOUT LIMITING THE
 FOREGOING, SHALL  WITH  RESPECT  TO  SECTION  223  CLAIMS  OVERRIDE  ANY
 CONTRACTUAL PROVISIONS THAT ARE INCONSISTENT WITH THE PROVISIONS OF THIS
 ARTICLE.   NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS ARTICLE
 SHALL NOT OPERATE RETROACTIVELY AS TO DEBTOR STATES THAT ARE NOT  SOVER-
 EIGN NATIONS.
   2.  ANY  CREDITORS  OF  A  DEBTOR STATE WHOSE CLAIMS ARE NOT OTHERWISE
 GOVERNED BY THIS ARTICLE MAY CONTRACTUALLY  OPT  IN  TO  THIS  ARTICLE'S
 TERMS, CONDITIONS, AND PROVISIONS.
   3.  THE  TERMS, CONDITIONS, AND PROVISIONS OF THIS ARTICLE SHALL APPLY
 TO THE DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE DEBTOR STATE AND  CREDI-
 TORS  OPTING  IN  UNDER  SUBDIVISION  TWO  OF  THIS  SECTION  AS IF SUCH
 RELATIONSHIP WERE GOVERNED BY THE LAWS OF NEW YORK STATE UNDER  SUBDIVI-
 SION THREE OF SECTION TWO HUNDRED TWENTY-THREE OF THIS ARTICLE.
   § 232. SEVERABILITY. IF ANY  PROVISION OF THIS ARTICLE OR ITS APPLICA-
 TION  TO  ANY  PERSON  OR   CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY
 SHALL NOT AFFECT OTHER PROVISIONS OR APPLICATIONS OF THIS ARTICLE  WHICH
 CAN  BE  GIVEN  EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION, AND
 TO  THIS END, THE PROVISIONS OF  THIS  ARTICLE  ARE  SEVERABLE.  WITHOUT
 LIMITING  THE  FOREGOING, A DEBTOR STATE'S CHOICE TO HAVE CLAIMS COVERED
 AS A SECTION 223 CLAIM SHALL BE VALID EVEN IF ITS CHOICE TO HAVE  CLAIMS
 COVERED  AS  A  SECTION  230 CLAIM OF THIS ARTICLE WOULD BE INVALID, AND
 VICE VERSA.
   § 3. This act shall take effect immediately.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Senate Bill S5542A

Sponsored By

Current Bill Status - In Senate Committee Banks Committee

Bill Amendments

co-Sponsors

2023-S5542 - Details

2023-S5542 - Summary

2023-S5542 - Sponsor Memo

2023-S5542 - Bill Text download pdf

co-Sponsors

2023-S5542A (ACTIVE) - Details

2023-S5542A (ACTIVE) - Summary

2023-S5542A (ACTIVE) - Sponsor Memo

2023-S5542A (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5542A

Share this bill

Sponsored By

Current Bill Status - In Senate Committee Banks Committee

Bill Amendments

co-Sponsors

2023-S5542 - Details

2023-S5542 - Summary

2023-S5542 - Sponsor Memo

2023-S5542 - Bill Text download pdf

co-Sponsors

2023-S5542A (ACTIVE) - Details

2023-S5542A (ACTIVE) - Summary

2023-S5542A (ACTIVE) - Sponsor Memo

2023-S5542A (ACTIVE) - Bill Text download pdf

Comments