Bill Text: NY A02102 | 2023-2024 | General Assembly | Introduced

New York Assembly Bill 2102 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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

Spectrum: Partisan Bill (Democrat 26-0)

Status: (Introduced - Dead) 2024-01-03 - referred to banks [A02102 Detail]

Download: New_York-2023-A02102-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________

                                          2102

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    January 23, 2023
                                       ___________

        Introduced  by  M.  of  A.  DAVILA, RIVERA, GONZALEZ-ROJAS, CRUZ, CLARK,
          REYES, MAMDANI, BURDICK, MITAYNES, GALLAGHER, COLTON, FORREST,  SIMON,
          TAYLOR, JACKSON -- read once and referred 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:

     1    Section 1. The banking law is amended by adding a  new  article  7  to
     2  read as follows:
     3                                  ARTICLE 7
     4                       SOVEREIGN AND SUBNATIONAL DEBT
     5  Section 300. Legislative intent.
     6          301. Definitions.
     7          302. Petition for relief; recognition.
     8          303. Notification of creditors.
     9          304. Auditing process.
    10          305. Submission, contents and voting on plan.
    11          306. Financing the restructuring.
    12          307. Priority of repayment.
    13          308. Adjudication of disputes.
    14          309. Application; opt in.
    15    §  300.  Legislative intent. The purpose of this article is to provide
    16  effective  mechanisms  for  restructuring  unsustainable  sovereign  and
    17  subnational debt so as to reduce:
    18    1. the social costs of sovereign and subnational debt crises;
    19    2. systemic risk to the financial system;
    20    3. creditor uncertainty; and
    21    4.  the  need  for  sovereign and subnational debt bailouts, which are
    22  costly and create moral hazard.
    23    § 301. Definitions. For purposes of this article:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02418-01-3

        A. 2102                             2

     1    1. "creditor" means a person or entity that  has  a  claim  against  a
     2  state;
     3    2.  "claim"  means a payment claim against a state for monies borrowed
     4  or for the state's guarantee of,  or  other  contingent  obligation  on,
     5  monies borrowed; the term "monies borrowed" shall include the following,
     6  whether or not it represents the borrowing of money:  monies owing under
     7  bonds;  debentures;  notes, or similar instruments; monies owing for the
     8  deferred purchase price  of  property  or  services,  other  than  trade
     9  accounts  payable  arising  in  the  ordinary course of business; monies
    10  owing on capitalized lease obligations; monies owing on or with  respect
    11  to letters of credit, bankers' acceptances, or other extensions of cred-
    12  it;  and monies owing on money market instruments or instruments used to
    13  finance trade;
    14    3. "comprehensive audit" means a supervisory action taken  to  examine
    15  and  evaluate  the  public debt contracting, refinancing, or negotiation
    16  process, in order to determine the  lawfulness,  transparency,  quality,
    17  efficacy, efficiency, and sustainability thereof;
    18    4.  "plan"  means  a  debt  restructuring plan contemplated by section
    19  three hundred five of this article;
    20    5. "state" means a sovereign nation; or unincorporated  territory;  or
    21  any  subnational  unit thereof, excluding any municipality whose adjust-
    22  ment or debts is governed by 11 U.S.C. 9; and
    23    6. "supervisory authority" means an independent body referred  by  the
    24  New York state senate finance committee.
    25    §  302. Petition for relief; recognition. 1. A state may invoke appli-
    26  cation of this article by filing a voluntary petition  for  relief  with
    27  the supervisory authority.
    28    2. Such petition shall certify that the state:
    29    (a)  seeks  relief  under  this article, and has not previously sought
    30  relief under this article, or under any other law that is  substantially
    31  in the form of this article, during the past ten years;
    32    (b) needs relief under this article to restructure claims that, absent
    33  such relief, would constitute unsustainable debt of the state;
    34    (c)  agrees  to restructure those claims in accordance with this arti-
    35  cle;
    36    (d) agrees to all other terms, conditions and provisions of this arti-
    37  cle; and
    38    (e) has duly enacted any national or subnational law needed to  effec-
    39  tuate  these agreements. If requested by the supervisory authority, such
    40  petition shall also  attach  documents  and  legal  opinions  evidencing
    41  compliance with this paragraph.
    42    3. Immediately after such a petition for relief has been filed, and so
    43  long  as such filing has not been dismissed by the supervisory authority
    44  for lack of good faith, the terms, conditions, and  provisions  of  this
    45  article shall:
    46    (a)  apply  to  the debtor-creditor relationship between the state and
    47  its creditors to the extent such relationship is governed by the law  of
    48  this jurisdiction;
    49    (b)  apply  to  the debtor-creditor relationship between the state and
    50  its creditors to the extent such relationship is governed by the law  of
    51  another  jurisdiction  that has enacted law substantially in the form of
    52  this article; and
    53    (c) be recognized in,  and  by,  all  other  jurisdictions  that  have
    54  enacted law substantially in the form of this article.

        A. 2102                             3

     1    §  303. Notification of creditors.  1. Within thirty days after filing
     2  its petition for relief, the state shall notify all of its known  credi-
     3  tors of its intention to negotiate a plan under this article.
     4    2. The supervisory authority shall prepare and maintain a current list
     5  of  creditors  of the state and verify claims for the purposes of super-
     6  vising voting under this article.
     7    § 304.  Auditing process. 1. A comprehensive audit shall be conducted.
     8    2. The supervisory authority  shall  choose  an  independent  body  to
     9  conduct such comprehensive audit.
    10    3.  The  costs associated with a comprehensive audit shall be borne by
    11  the state.
    12    4. The audit process shall abide by the general principles related  to
    13  the  International Standards of Supreme Audit Institutions 100 issued by
    14  the International Organization of Supreme Audit Institutions.
    15    § 305. Submission, contents and voting  on  plan.  1.  The  state  may
    16  submit  a  plan to its creditors at any time, and may submit alternative
    17  plans from time to time.
    18    2. No other person or entity may submit a plan on behalf of the state.
    19    3. A plan shall:
    20    (a) designate classes of claims in accordance with subdivision six  of
    21  this section;
    22    (b) specify the proposed treatment of each class of claims;
    23    (c)  provide  the same treatment for each claim of a particular class,
    24  unless the holder of a claim agrees to a less favorable treatment;
    25    (d) disclose any claims not included in the plan's classes of claims;
    26    (e) provide adequate means for the  plan's  implementation  including,
    27  with  respect  to any claims, curing or waiving any defaults or changing
    28  the maturity dates, principal amount, interest rate, or other  terms  or
    29  canceling or modifying any liens or encumbrances; and
    30    (f)  certify  that,  if  the plan becomes effective and binding on the
    31  state and its creditors under subdivision  four  of  this  section,  the
    32  state's debt will become sustainable.
    33    4.  A  plan  shall  become  effective and binding on the state and its
    34  creditors when it has been submitted by the state and agreed to by  each
    35  class of such creditors' claims designated in the plan under subdivision
    36  three of this section. Thereupon, the state shall be discharged from all
    37  claims  included  in  those classes of claims, except as provided in the
    38  plan.
    39    5. A class of claims has agreed to a  plan  if  creditors  holding  at
    40  least  two-thirds  in  amount  and  more  than one-half in number of the
    41  claims of such class voting on such plan agree to the plan.
    42    6. Each class of claims shall consist of claims against the state that
    43  are equal in priority, provided that:
    44    (a) equal claims need not all be included in the same class;
    45    (b) claims of governmental or multi-governmental entities  each  shall
    46  be classed separately; and
    47    (c)  claims  that  are  governed by this article or the law of another
    48  jurisdiction that is substantially in the form of this article shall not
    49  be classed with other claims.
    50    § 306. Financing the restructuring. 1. Subject to subdivision three of
    51  this section the state shall have the right  to  borrow  money  on  such
    52  terms and conditions as it deems appropriate.
    53    2.  The state shall notify all of its known creditors of its intention
    54  to borrow under subdivision one of this section, the  terms  and  condi-
    55  tions  of the borrowing, and the proposed use of the loan proceeds. Such
    56  notice shall also direct those creditors to respond to  the  supervisory

        A. 2102                             4

     1  authority within thirty days as to whether they approve or disapprove of
     2  such loan.
     3    3.  Any such loan shall be approved by creditors holding at least two-
     4  thirds in amount of the claims of creditors responding to the superviso-
     5  ry authority within that thirty-day period.
     6    4. In order for the priority of repayment, and corresponding  subordi-
     7  nation,  under  section three hundred seven of this article to be effec-
     8  tive, any such loan shall additionally be approved by creditors  holding
     9  at  least  two-thirds  in  principal amount of the covered claims of the
    10  creditors responding to the supervisory authority within that thirty-day
    11  period. Claims shall be deemed to be covered if  they  are  governed  by
    12  this article or by the law of another jurisdiction that is substantially
    13  in the form of this article.
    14    §  307. Priority of repayment. 1. The state shall repay loans approved
    15  under this article prior to paying any other claims.
    16    2. The claims of creditors of the state are subordinated to the extent
    17  needed to effectuate the priority payment  under  this  section.    Such
    18  claims are not subordinated for any other purpose.
    19    3.  The  priority  of  payment, and corresponding subordination, under
    20  this section is expressly subject to the  approval  by  creditors  under
    21  subdivision four of section three hundred six of this article.
    22    § 308. Adjudication of disputes. A court of competent jurisdiction may
    23  appoint  a  referee  or  a special master to make recommendations to the
    24  court regarding the resolution of any disputes arising under this  arti-
    25  cle.
    26    § 309. Application; opt in. 1. This article applies where, by contract
    27  or otherwise,
    28    (a) the law of New York state governs the debtor-creditor relationship
    29  between a state and its creditors; and
    30    (b)  the  application  of  this  article is invoked in accordance with
    31  section three hundred two of this article.
    32    2. Where this article applies, it  shall  operate  retroactively  and,
    33  without   limiting   the   foregoing,  shall  override  any  contractual
    34  provisions that are inconsistent with the provisions of this article.
    35    3. Any creditors of the state whose claims are not otherwise  governed
    36  by this article may contractually opt in to this article's terms, condi-
    37  tions, and provisions.
    38    4.  The  terms, conditions, and provisions of this article shall apply
    39  to the debtor-creditor relationship  between  the  state  and  creditors
    40  opting  in under subdivision one of this section as if such relationship
    41  were governed by the laws of New York state under subdivision  three  of
    42  section three hundred two of this article.
    43    § 2. This act shall take effect immediately.