NY State Senate Bill S5542

Current Bill Status - In Senate Committee Banks Committee

Introduced
In Committee
On Floor Calendar
- Passed Senate
- Passed Assembly
Delivered to Governor
Signed/Vetoed by Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 08, 2023	referred to banks

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S5542 (ACTIVE) - Details

See Assembly Version of this Bill:: A2102
Current Committee:: Senate Banks
Law Section:: Banking Law
Laws Affected:: Add Art 7 §§300 - 309, Bank L
Versions Introduced in 2021-2022 Legislative Session:: S6627, A7562

S5542 (ACTIVE) - Summary

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

S5542 (ACTIVE) - 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.

S5542 (ACTIVE) - 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.

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The New York State Senate

senate Bill S5542

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Current Bill Status - In Senate Committee Banks Committee

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S5542 (ACTIVE) - Details

S5542 (ACTIVE) - Summary

S5542 (ACTIVE) - Sponsor Memo

S5542 (ACTIVE) - Bill Text download pdf

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senate Bill S5542

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Sponsored By

Current Bill Status - In Senate Committee Banks Committee

Your Voice

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Co-Sponsors

S5542 (ACTIVE) - Details

S5542 (ACTIVE) - Summary

S5542 (ACTIVE) - Sponsor Memo

S5542 (ACTIVE) - Bill Text download pdf

Comments