NY State Senate Bill 2023-S5623

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
Mar 09, 2023	referred to judiciary

co-Sponsors

2023-S5623 (ACTIVE) - Details

See Assembly Version of this Bill:: A5290
Current Committee:: Senate Judiciary
Law Section:: Judiciary Law
Laws Affected:: Amd §489, add §489-a, Judy L
Versions Introduced in 2023-2024 Legislative Session:: S5623, A5290

2023-S5623 (ACTIVE) - Summary

Relates to the purchase of claims by corporations or collection agencies; relates to the inference of an assignee's intent and purpose in taking an assignment of a claim against an obligor that is not an eligible obligor; provides that instruments governed by New York law calling for payment of a monetary obligation by a foreign state impose a duty on the holder to participate in a qualified restructuring of such instruments.

2023-S5623 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S5623

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the judiciary law, in relation to the purchase of claims
by corporations or collection agencies and to certain instruments call-
ing for payment of a monetary obligation by a foreign state

 
PURPOSE OR GENERAL IDEA OF BILL:

Relates to the purchase of claims by corporations or collection agen-
cies.

 
SUMMARY OF PROVISIONS:

Section one of this bill amends section 489 of judiciary law to clarify
what the term "eligible obligor" is and which entity qualifies as such.

Section two of this bill amends section 489 of the judiciary law to
prohibit the purchase of securities or other financial instruments for
the sole purpose of litigation.

Section three of this bill amends section 489 of the judiciary law to
add section 489-a , which requires a holder of debt to participate in
good faith in a qualified restructuring of debt and defines what a qual-
ified restructuring is.

Section four sets the effective date.

 
JUSTIFICATION:

For years, vulture hedge funds have built their wealth off struggling
nations by using the same playbook - they bet on a nation's economic
failure and engage in predatory practices that increase poverty and get
in the way of economic recovery. These hedge funds have made billions in
profits while leaving nations with unsurmountable debts and a destabi-
lized economy. Approximately half of sovereign debt contracts are
governed by New York law, meaning if we change the law, we change the
rules by which these hedge funds play.

The Champerty Doctrine prohibits the purchase of securities or other
financial instruments for the sole purpose of litigation. This bill will
strengthen this provision and eliminate the safe harbor for transactions
over $500,000 to prevent vulture funds from profiteering from countries'
debt at the expense of people. The bill also requires a holder of debt
to participate in good faith in a qualified restructuring of debt and
defines what a qualified restructuring is as it relates to foreign
states with debts that have been assessed as unsustainable by the Inter-
national Monetary Fund.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2023-S5623 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5623
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               March 9, 2023
                                ___________
 
 Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the judiciary law, in relation to the purchase of claims
   by corporations or collection  agencies  and  to  certain  instruments
   calling for payment of a monetary obligation by a foreign state

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 2 of section 489 of the judiciary law, as added
 by chapter 394 of the laws of 2004, is amended to read as follows:
   2. Except as set forth in  subdivision  three  of  this  section,  the
 provisions  of  subdivision  one  of this section shall not apply to any
 assignment, purchase or transfer hereafter made of one  or  more  bonds,
 promissory  notes,  bills  of  exchange,  book debts, or other things in
 action, or any claims or demands, if such assignment, purchase or trans-
 fer included bonds, promissory notes,  bills  of  exchange  and/or  book
 debts,  issued  by  or  enforceable  against  the  same ELIGIBLE obligor
 (whether or not also issued by or enforceable against any other ELIGIBLE
 obligors), having an aggregate purchase price of at least  five  hundred
 thousand dollars, in which event the exemption provided by this subdivi-
 sion  shall  apply as well to all other items, including other things in
 action, claims and demands, included in  such  assignment,  purchase  or
 transfer  (but  only  if  such  other items are issued by or enforceable
 against the same ELIGIBLE obligor, or relate to or arise  in  connection
 with  such  bonds, promissory notes, bills of exchange and/or book debts
 or the issuance thereof).   FOR THE PURPOSES OF  THIS  SUBDIVISION,  THE
 TERM  "ELIGIBLE  OBLIGOR"  MEANS AN OBLIGOR THAT QUALIFIES AS A "DEBTOR"
 WITHIN THE MEANING OF TITLE 11 OF THE UNITED  STATES  CODE  (THE  UNITED
 STATES BANKRUPTCY CODE).
   §  2.  Section  489  of  the  judiciary law is amended by adding a new
 subdivision 4 to read as follows:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08948-01-3
 S. 5623                             2

 
   4. FOR PURPOSES OF SUBDIVISION ONE  OF  THIS  SECTION,  AN  ASSIGNEE'S
 INTENT AND PURPOSE IN TAKING AN ASSIGNMENT OF A CLAIM AGAINST AN OBLIGOR
 THAT IS NOT AN ELIGIBLE OBLIGOR MAY BE INFERRED FROM: (A) THE ASSIGNEE'S
 (OR   ITS  AFFILIATES')  HISTORY  OF  ACQUIRING  CLAIMS  AT  SIGNIFICANT
 DISCOUNTS  FROM  THEIR FACE VALUES AND BRINGING LEGAL ACTIONS TO ENFORCE
 THOSE CLAIMS, (B) THE ASSIGNEE (OR  ANY  PREDECESSOR  IN  TITLE  TO  THE
 CLAIM)  HAVING  REFUSED TO PARTICIPATE IN A CONSENSUAL SETTLEMENT OF THE
 CLAIM IF HOLDERS OF NOT LESS THAN TWO-THIRDS (BY OUTSTANDING AMOUNT)  OF
 SIMILAR  CLAIMS  AGAINST  THE  OBLIGOR HAD AGREED TO ACCEPT THE TERMS OF
 THAT SETTLEMENT, AND (C) SUCH OTHER FACTS OR CIRCUMSTANCES  AS  A  COURT
 MAY  FIND  RELEVANT  IN  ASSESSING  THE ASSIGNEE'S INTENT AND PURPOSE IN
 TAKING THE ASSIGNMENT.
   § 3. The judiciary law is amended by adding a  new  section  489-a  to
 read as follows:
   § 489-A. SOVEREIGN DEBT MODIFICATIONS. 1. EVERY INSTRUMENT GOVERNED BY
 THE  LAW  OF THE STATE OF NEW YORK CALLING FOR THE PAYMENT OF A MONETARY
 OBLIGATION BY A FOREIGN STATE  (AS  DEFINED  IN  28  U.S.C.  §  1603(A))
 IMPOSES A DUTY ON THE HOLDER TO PARTICIPATE IN GOOD FAITH IN A QUALIFIED
 RESTRUCTURING AFFECTING SUCH INSTRUMENT.
   2.  FOR  PURPOSES OF THIS SECTION, A "QUALIFIED RESTRUCTURING" MEANS A
 MODIFICATION OF THE TERMS OF SOME OR ALL OF THE UNSECURED  DEBT  INSTRU-
 MENTS  ISSUED  BY A FOREIGN STATE WHOSE DEBT HAS BEEN ASSESSED AS UNSUS-
 TAINABLE BY THE INTERNATIONAL MONETARY  FUND  WITHIN  THE  PRIOR  TWELVE
 MONTHS  PROVIDED THAT THE MODIFICATION IS ACCEPTED BY THE HOLDERS OF NOT
 LESS THAN TWO-THIRDS IN AMOUNT AND MORE THAN ONE-HALF IN NUMBER  OF  THE
 DEBT  INSTRUMENTS  AFFECTED BY THE MODIFICATION (EXCLUDING, FOR PURPOSES
 OF VOTING, ANY INSTRUMENTS THAT ARE OWNED  OR  CONTROLLED,  DIRECTLY  OR
 INDIRECTLY, BY THE FOREIGN STATE OR ANY OF ITS AGENCIES OR INSTRUMENTAL-
 ITIES).
   § 4. This act shall take effect immediately.

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Senate Bill S5623

Sponsored By

Current Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

2023-S5623 (ACTIVE) - Details

2023-S5623 (ACTIVE) - Summary

2023-S5623 (ACTIVE) - Sponsor Memo

2023-S5623 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5623

Share this bill

Sponsored By

Liz Krueger

Current Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

Cordell Cleare

Julia Salazar

2023-S5623 (ACTIVE) - Details

2023-S5623 (ACTIVE) - Summary

2023-S5623 (ACTIVE) - Sponsor Memo

2023-S5623 (ACTIVE) - Bill Text download pdf

Comments