STATE OF NEW YORK ________________________________________________________________________ 1477 2025-2026 Regular Sessions IN SENATE January 10, 2025 ___________ Introduced by Sens. KRUEGER, BRISPORT, CLEARE, HARCKHAM, RAMOS, SALAZAR, SEPULVEDA -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary 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 The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Legislative intent. The intended purpose of this act is to 2 restore the champerty defense in sovereign debt lawsuits for claims 3 greater than $500,000 with respect to suits brought by litigious holdout 4 investors. The restoration is not intended to apply to conventional and 5 generally cooperative investors who may occasionally choose to sue, 6 where "conventional investors" includes investors that regularly buy and 7 hold sovereign debt purchased in the primary market and "cooperative 8 investors" includes distressed debt investors that regularly purchase 9 debt at a discount in the secondary market and have a record of support- 10 ing the consensual resolution of sovereign debt distress through serving 11 as a member of creditor committees or by generally participating in 12 transactions accepted by other creditors following a negotiation. 13 § 2. Subdivision 2 of section 489 of the judiciary law, as added by 14 chapter 394 of the laws of 2004, is amended to read as follows: 15 2. Except as set forth in subdivision three of this section, the 16 provisions of subdivision one of this section shall not apply to any 17 assignment, purchase or transfer hereafter made of one or more bonds, 18 promissory notes, bills of exchange, book debts, or other things in 19 action, or any claims or demands, if such assignment, purchase or trans- 20 fer included bonds, promissory notes, bills of exchange and/or book 21 debts, issued by or enforceable against the same eligible obligor 22 (whether or not also issued by or enforceable against any other eligible EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02058-02-5
S. 1477 2 1 obligors), having an aggregate purchase price of at least five hundred 2 thousand dollars, in which event the exemption provided by this subdivi- 3 sion shall apply as well to all other items, including other things in 4 action, claims and demands, included in such assignment, purchase or 5 transfer (but only if such other items are issued by or enforceable 6 against the same eligible obligor, or relate to or arise in connection 7 with such bonds, promissory notes, bills of exchange and/or book debts 8 or the issuance thereof). For the purposes of this subdivision, the 9 term "eligible obligor" means an obligor other than (i) the government 10 of any foreign country or of any political subdivision of a foreign 11 country, or (ii) an issuer of a bond, loan, or debt instrument guaran- 12 teed by the government of any foreign country or of any political subdi- 13 vision of a foreign country. 14 § 3. Section 489 of the judiciary law is amended by adding a new 15 subdivision 4 to read as follows: 16 4. For purposes of subdivision one of this section, an assignee's 17 intent and purpose in taking an assignment of a claim against an obligor 18 that is not an eligible obligor may be inferred from the history of the 19 assignee's (and its affiliates') behavior in transactions involving the 20 debts of other obligors including, but not limited to, whether that 21 history indicates a pattern of either (a) participating in good faith 22 alongside other creditors in consensual resolutions of such situations 23 or (b) acquiring claims against such obligors at a significant discount 24 from face value, refusing to participate in consensual workouts and 25 instead resorting to legal enforcement of the acquired claims. A court 26 shall consider such other facts and circumstances related to the acqui- 27 sition of the claims or the assignee's overall business activities in 28 the debt of any government or political subdivision of a foreign country 29 as it may find relevant in assessing the assignee's intent and purpose. 30 § 4. Section 5004 of the civil practice law and rules, as amended by 31 chapter 831 of the laws of 2021, is amended to read as follows: 32 § 5004. Rate of interest. (a) Interest shall be at the rate of nine 33 per centum per annum, except where otherwise provided by statute; 34 provided the annual rate of interest to be paid in an action arising out 35 of a consumer debt where a natural person is a defendant shall be two 36 per centum per annum (i) on a judgment or accrued claim for judgments 37 entered on or after the effective date of [the] chapter eight hundred 38 thirty-one of the laws of two thousand twenty-one [which amended this 39 section], and (ii) for interest upon a judgment pursuant to section five 40 thousand three of this article from the date of the entry of judgment on 41 any part of a judgment entered before the effective date of [the] chap- 42 ter eight hundred thirty-one of the laws of two thousand twenty-one 43 [which amended this section] that is unpaid as of such effective date. 44 (b) For actions or proceedings commenced after May fifteenth, two 45 thousand twenty-four, excluding actions or proceedings with respect to 46 payment defaults that occurred before May fifteenth, two thousand twen- 47 ty-four, the annual rate of interest to be paid in an action arising out 48 of a claim against (i) a government of any foreign country or of any 49 political subdivision of a foreign country, or (ii) an issuer of a bond, 50 loan, or debt instrument guaranteed by the government of any foreign 51 country or of any political subdivision of a foreign country as a 52 defendant shall be equal to the weekly average one-year constant maturi- 53 ty treasury yield, as published by the Board of Governors of the Federal 54 Reserve System, for the calendar week proceeding the date of entry of 55 the judgment awarding damages (28 U.S.C. §1961(a)). For the purpose of 56 this subdivision, a "claim against a foreign state" means a payment
S. 1477 3 1 claim against a foreign state for monies borrowed or for the foreign 2 state's guarantee of, or other contingent obligation on, monies 3 borrowed; the term "monies borrowed" shall include the following, wheth- 4 er or not it represents the borrowing of money: monies owing 5 under bonds; debentures; notes, or similar instruments of original matu- 6 rity of at least one year; monies owing for the deferred purchase 7 price of property or services, other than trade accounts payable arising 8 in the ordinary course of government operations; monies owing on 9 capitalized lease obligations; monies owing on or with respect to 10 letters of credit, bankers' acceptances, or other extensions of credit 11 of original maturity of at least one year. 12 (c) For the purpose of this section "consumer debt" means any obli- 13 gation or alleged obligation of any natural person to pay money arising 14 out of a transaction in which the money, property, insurance or services 15 which are the subject of the transaction are primarily for personal, 16 family or household purposes, whether or not such obligation has been 17 reduced to judgment, including, but not limited to, a consumer credit 18 transaction, as defined in subdivision (f) of section one hundred five 19 of this chapter. 20 [(c)] (d) This section does not affect or create any rights or reme- 21 dies related to any amounts paid prior to the effective date of this 22 subdivision, including amounts paid to satisfy judgments or to accrued 23 interest or fees paid, or with respect to judgments satisfied prior to 24 the effective date of this subdivision. For amounts paid prior to the 25 effective date of this subdivision and lawfully applied in satisfaction 26 or partial satisfaction of interest or fees accrued prior to the effec- 27 tive date of this subdivision, this section shall not be construed to 28 require a judgment creditor or sheriff to (i) return or refund such 29 amounts to judgment debtors; or (ii) apply such payments to satisfy any 30 part of a money judgment other than fees or interest upon judgment 31 pursuant to section five thousand three of this article. 32 [(d)] (e) If any word, phrase, clause, sentence, paragraph, subdivi- 33 sion, or part of this section or its application to any person or 34 circumstance is held invalid by any court of competent jurisdiction 35 after exhaustion of all further judicial review, the invalidity shall 36 not affect, impair, or invalidate the remainder of this section or 37 applications of this article which can be given effect without the 38 invalid provision or application, and to this end the provisions of this 39 section are severable. 40 § 5. This act shall take effect immediately.