Bill > A07562

This bill amends the New York Banking Law to create a new Article 7 that provides a framework for restructuring unsustainable sovereign and subnational (state/local government) debt. The key provisions include: 1. Allowing a state/subnational government to file a voluntary petition for debt relief with an independent supervisory authority, which would then apply the provisions of the new law to the debtor-creditor relationship. 2. Requiring a comprehensive audit of the public debt contracting and negotiation process to determine its lawfulness, transparency, and sustainability. 3. Establishing a process for the state/subnational government to submit a debt restructuring plan to its creditors, with voting requirements for the plan to be approved. 4. Allowing the state/subnational government to borrow money to finance the debt restructuring, subject to approval by a supermajority of responding creditors. 5. Prioritizing repayment of the debt restructuring loans over other creditor claims, with the creditor claims being subordinated to the extent necessary to effectuate this priority. The overall purpose of the bill is to provide an effective mechanism for restructuring unsustainable sovereign and subnational debt, in order to reduce the social costs of debt crises, systemic financial risk, creditor uncertainty, and the need for costly government bailouts.