Relates to claims against certain obligators; defines the term "eligible obligator" to mean any individual or entity who qualifies as a "debtor" pursuant to Title 11 of the United States Code.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9317
SPONSOR: Gonzalez-Rojas TITLE OF BILL:
An act to amend the judiciary law, in relation to claims against certain
obligators
PURPOSE OR GENERAL IDEA OF BILL:
Relates to claims against certain obligators
SUMMARY OF PROVISIONS:
Section one 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 two of this bill 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.
PRIOR LEGISLATIVE HISTORY:
None
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have
become a law
STATE OF NEW YORK
________________________________________________________________________
9317
IN ASSEMBLY
February 23, 2022
___________
Introduced by M. of A. GONZALEZ-ROJAS -- read once and referred to the
Committee on Judiciary
AN ACT to amend the judiciary law, in relation to claims against certain
obligators
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 2 of section 489 of the judiciary law, as added
2 by chapter 394 of the laws of 2004, is amended and a new subdivision 4
3 is added to read as follows:
4 2. Except as set forth in subdivision three of this section, the
5 provisions of subdivision one of this section shall not apply to any
6 assignment, purchase or transfer hereafter made of one or more bonds,
7 promissory notes, bills of exchange, book debts, or other things in
8 action, or any claims or demands, if such assignment, purchase or trans-
9 fer included bonds, promissory notes, bills of exchange and/or book
10 debts, issued by or enforceable against the same eligible obligor
11 (whether or not also issued by or enforceable against any other eligible
12 obligors), having an aggregate purchase price of at least five hundred
13 thousand dollars, in which event the exemption provided by this subdivi-
14 sion shall apply as well to all other items, including other things in
15 action, claims and demands, included in such assignment, purchase or
16 transfer (but only if such other items are issued by or enforceable
17 against the same eligible obligor, or relate to or arise in connection
18 with such bonds, promissory notes, bills of exchange and/or book debts
19 or the issuance thereof). For purposes of this subdivision, the term
20 "eligible obligor" means an obligor that qualifies as a "debtor" within
21 the meaning of Title 11 of the United States Code.
22 4. For purposes of subdivision one of this section, an assignee's
23 intent and purpose in taking an assignment of a claim against an obligor
24 that is not an eligible obligor may be inferred from (a) the assignee's
25 (or its affiliates') history of acquiring claims at significant
26 discounts from a bond, promissory note, bill of exchange, book debt, or
27 other thing in action's face value and bringing legal actions to enforce
28 such claims; (b) the assignee or any predecessor in title to the claim
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14673-01-2
A. 9317 2
1 having refused to participate in a consensual settlement of the claim if
2 holders of notes not less than sixty-six and two-thirds percent of the
3 outstanding amount of the notes of similar claims against the obligor
4 had agreed to accept the terms of that settlement; and (c) such other
5 facts or circumstances as a court may find relevant in assessing the
6 assignee's intent and purpose in taking the assignment.
7 § 2. This act shall take effect on the thirtieth day after it shall
8 have become a law. Effective immediately, the addition, amendment and/or
9 repeal of any rule or regulation necessary for the implementation of
10 this act on its effective date are authorized to be made and completed
11 on or before such effective date.
