Bill > S06627

This bill amends the banking law to provide effective mechanisms for restructuring unsustainable sovereign and subnational debt. The key provisions include: 1. A state can invoke the application of this law by filing a voluntary petition for relief with a supervisory authority, which triggers the application of the law's terms and conditions to the state's debtor-creditor relationships. 2. The state must notify its known creditors of its intention to negotiate a debt restructuring plan under this law, and an independent audit of the state's debt contracting process will be conducted. 3. The state can submit a debt restructuring plan to its creditors, which must be approved by at least two-thirds in amount and more than one-half in number of the claims in each class of creditors. 4. The state can borrow money to finance the debt restructuring, subject to approval by creditors holding at least two-thirds in amount of the responding creditors' claims. 5. Repayment of the approved borrowing will have priority over other claims, and the claims of creditors are subordinated to the extent necessary to effectuate this priority. The overall purpose of the law is to provide effective mechanisms to reduce the social costs of sovereign and subnational debt crises, systemic risk to the financial system, creditor uncertainty, and the need for costly bailouts.