S T A T E O F N E W Y O R K
________________________________________________________________________
1477
2025-2026 Regular Sessions
I N S E N A T E
January 10, 2025
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Introduced by Sens. KRUEGER, BRISPORT, CLEARE, HARCKHAM, RAMOS, SALAZAR,
SEPULVEDA -- read twice and ordered printed, and when printed to be
committed to the Committee on Judiciary
AN ACT to amend the judiciary law and the civil practice law and rules,
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. Legislative intent. The intended purpose of this act is to
restore the champerty defense in sovereign debt lawsuits for claims
greater than $500,000 with respect to suits brought by litigious holdout
investors. The restoration is not intended to apply to conventional and
generally cooperative investors who may occasionally choose to sue,
where "conventional investors" includes investors that regularly buy and
hold sovereign debt purchased in the primary market and "cooperative
investors" includes distressed debt investors that regularly purchase
debt at a discount in the secondary market and have a record of support-
ing the consensual resolution of sovereign debt distress through serving
as a member of creditor committees or by generally participating in
transactions accepted by other creditors following a negotiation.
§ 2. 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
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02058-02-5
S. 1477 2
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 OTHER THAN (I) THE GOVERNMENT
OF ANY FOREIGN COUNTRY OR OF ANY POLITICAL SUBDIVISION OF A FOREIGN
COUNTRY, OR (II) AN ISSUER OF A BOND, LOAN, OR DEBT INSTRUMENT GUARAN-
TEED BY THE GOVERNMENT OF ANY FOREIGN COUNTRY OR OF ANY POLITICAL SUBDI-
VISION OF A FOREIGN COUNTRY.
§ 3. Section 489 of the judiciary law is amended by adding a new
subdivision 4 to read as follows:
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 THE HISTORY OF THE
ASSIGNEE'S (AND ITS AFFILIATES') BEHAVIOR IN TRANSACTIONS INVOLVING THE
DEBTS OF OTHER OBLIGORS INCLUDING, BUT NOT LIMITED TO, WHETHER THAT
HISTORY INDICATES A PATTERN OF EITHER (A) PARTICIPATING IN GOOD FAITH
ALONGSIDE OTHER CREDITORS IN CONSENSUAL RESOLUTIONS OF SUCH SITUATIONS
OR (B) ACQUIRING CLAIMS AGAINST SUCH OBLIGORS AT A SIGNIFICANT DISCOUNT
FROM FACE VALUE, REFUSING TO PARTICIPATE IN CONSENSUAL WORKOUTS AND
INSTEAD RESORTING TO LEGAL ENFORCEMENT OF THE ACQUIRED CLAIMS. A COURT
SHALL CONSIDER SUCH OTHER FACTS AND CIRCUMSTANCES RELATED TO THE ACQUI-
SITION OF THE CLAIMS OR THE ASSIGNEE'S OVERALL BUSINESS ACTIVITIES IN
THE DEBT OF ANY GOVERNMENT OR POLITICAL SUBDIVISION OF A FOREIGN COUNTRY
AS IT MAY FIND RELEVANT IN ASSESSING THE ASSIGNEE'S INTENT AND PURPOSE.
§ 4. Section 5004 of the civil practice law and rules, as amended by
chapter 831 of the laws of 2021, is amended to read as follows:
§ 5004. Rate of interest. (a) Interest shall be at the rate of nine
per centum per annum, except where otherwise provided by statute;
provided the annual rate of interest to be paid in an action arising out
of a consumer debt where a natural person is a defendant shall be two
per centum per annum (i) on a judgment or accrued claim for judgments
entered on or after the effective date of [the] chapter EIGHT HUNDRED
THIRTY-ONE of the laws of two thousand twenty-one [which amended this
section], and (ii) for interest upon a judgment pursuant to section five
thousand three of this article from the date of the entry of judgment on
any part of a judgment entered before the effective date of [the] chap-
ter EIGHT HUNDRED THIRTY-ONE of the laws of two thousand twenty-one
[which amended this section] that is unpaid as of such effective date.
(b) FOR ACTIONS OR PROCEEDINGS COMMENCED AFTER MAY FIFTEENTH, TWO
THOUSAND TWENTY-FOUR, EXCLUDING ACTIONS OR PROCEEDINGS WITH RESPECT TO
PAYMENT DEFAULTS THAT OCCURRED BEFORE MAY FIFTEENTH, TWO THOUSAND TWEN-
TY-FOUR, THE ANNUAL RATE OF INTEREST TO BE PAID IN AN ACTION ARISING OUT
OF A CLAIM AGAINST (I) A GOVERNMENT OF ANY FOREIGN COUNTRY OR OF ANY
POLITICAL SUBDIVISION OF A FOREIGN COUNTRY, OR (II) AN ISSUER OF A BOND,
LOAN, OR DEBT INSTRUMENT GUARANTEED BY THE GOVERNMENT OF ANY FOREIGN
COUNTRY OR OF ANY POLITICAL SUBDIVISION OF A FOREIGN COUNTRY AS A
DEFENDANT SHALL BE EQUAL TO THE WEEKLY AVERAGE ONE-YEAR CONSTANT MATURI-
TY TREASURY YIELD, AS PUBLISHED BY THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM, FOR THE CALENDAR WEEK PROCEEDING THE DATE OF ENTRY OF
THE JUDGMENT AWARDING DAMAGES (28 U.S.C. §1961(A)). FOR THE PURPOSE OF
THIS SUBDIVISION, A "CLAIM AGAINST A FOREIGN STATE" MEANS A PAYMENT
S. 1477 3
CLAIM AGAINST A FOREIGN STATE FOR MONIES BORROWED OR FOR THE FOREIGN
STATE'S GUARANTEE OF, OR OTHER CONTINGENT OBLIGATION ON, MONIES
BORROWED; THE TERM "MONIES BORROWED" SHALL INCLUDE THE FOLLOWING, WHETH-
ER OR NOT IT REPRESENTS THE BORROWING OF MONEY: MONIES OWING
UNDER BONDS; DEBENTURES; NOTES, OR SIMILAR INSTRUMENTS OF ORIGINAL MATU-
RITY OF AT LEAST ONE YEAR; MONIES OWING FOR THE DEFERRED PURCHASE
PRICE OF PROPERTY OR SERVICES, OTHER THAN TRADE ACCOUNTS PAYABLE 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 CREDIT
OF ORIGINAL MATURITY OF AT LEAST ONE YEAR.
(C) For the purpose of this section "consumer debt" means any obli-
gation or alleged obligation of any natural person to pay money arising
out of a transaction in which the money, property, insurance or services
which are the subject of the transaction are primarily for personal,
family or household purposes, whether or not such obligation has been
reduced to judgment, including, but not limited to, a consumer credit
transaction, as defined in subdivision (f) of section one hundred five
of this chapter.
[(c)] (D) This section does not affect or create any rights or reme-
dies related to any amounts paid prior to the effective date of this
subdivision, including amounts paid to satisfy judgments or to accrued
interest or fees paid, or with respect to judgments satisfied prior to
the effective date of this subdivision. For amounts paid prior to the
effective date of this subdivision and lawfully applied in satisfaction
or partial satisfaction of interest or fees accrued prior to the effec-
tive date of this subdivision, this section shall not be construed to
require a judgment creditor or sheriff to (i) return or refund such
amounts to judgment debtors; or (ii) apply such payments to satisfy any
part of a money judgment other than fees or interest upon judgment
pursuant to section five thousand three of this article.
[(d)] (E) If any word, phrase, clause, sentence, paragraph, subdivi-
sion, or part of this section or its application to any person or
circumstance is held invalid by any court of competent jurisdiction
after exhaustion of all further judicial review, the invalidity shall
not affect, impair, or invalidate the remainder of this section or
applications of this article which can be given effect without the
invalid provision or application, and to this end the provisions of this
section are severable.
§ 5. This act shall take effect immediately.
