BILL NUMBER: S5623A
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the judiciary law and the civil practice law and rules,
in relation to the purchase of claims by corporations or collection
agencies and to certain instruments calling for payment of a monetary
obligation by a foreign state
 
PURPOSE OR GENERAL IDEA OF BILL:
Relates to the purchase of claims by corporations or collection agen-
cies.
 
SUMMARY OF PROVISIONS:
Section one outlines the legislative intent of the bill
Section two of this bill amends section 489 of judiciary law to clarify
what the term "eligible obligor" is and which entity qualifies as such.
Section three 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. The language provides guidance as to
what indicates champertous behavior.
Section four amends the civil practice law and rules to lower the post-
judgement interest rate from 9% to the weekly average one-year constant
maturity Treasury yield for claims brought after May 15,2024.
Section five 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.
The scope of the bill is carefully tailored to narrowly focused on
blocking litigation brought by institutions whose history implies that
they buy debt instruments of financially distressed borrowers with the
express intention of pursuing a preferential recovery vis-a-vis other
similarly situated creditors. In the revised bill, no such implication
would be drawn in the case of conventional investors even if circum-
stances in a particular case result in the investor pursuing its legal
remedies.
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S5623: 489 judiciary law, 489(2) judiciary law
S5623A: 489 judiciary law, 489(2) judiciary law, 5004 civil practice law