The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2970
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 1, 2023
                                ___________
 
 Introduced  by  M.  of  A. FAHY, KELLES -- read once and referred 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
 A. 2970                             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.