Clifford Chance

Sovereign Debt Restructuring – Three New York Assembly Active Bills

17 May 2023

At present, the New York State Assembly has three active Bills relating to matters which, if passed into law, would have a material impact on the current process for the restructuring of sovereign debt. In respect of each Assembly Bill there is currently also a related active "same as" Bill in the New York State Senate. These Bills are described below:

1. Assembly Bill A5290 dated March 7, 2023 and Senate Bill S5623 dated March 9, 2023 which would alter New York State law on champerty in respect of sovereign claims.

2. Assembly Bill A2102A dated January 2023 and Senate Bill S5542 dated March 8, 2023 which would effectively impose a comprehensive sovereign debt restructuring mechanism through an amendment to the existing New York Banking Law through a new Article 7.

3. Assembly Bill A2970 dated February 1, 2023 and Senate Bill S4747 dated February 14, 2023 which would limit recoveries on sovereign claims to those which would have been applicable if they had been held by the US itself and those claims are the subject of one or more international initiatives in respect of the sovereign debt of an affected country.

The substance of the original Assembly Bill A2102 was a verbatim replica of Senate Bill S6627 of May 10, 2021, on which we produced a Client Briefing dated May 2021. However, in late March 2023, an amendment to Assembly Bill A2102 was introduced and, as this was the first amendment, the new version published on March 31, 2023 is now referred to as A2102A.

This Client Briefing starts with a description of the background circumstances which are likely to have influenced the promotion of these Bills. That description draws heavily on the Overview section of our May 2021 Client Briefing but is updated to reflect the most recent practical experience in the sovereign debt restructuring field.

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