The bill, which is called the Champerty Fix Act by its supporters, has until the end of this week to be advanced by lawmakers, Reuters reported Wednesday (June 3).
Because New York law governs over 50% of sovereign bonds around the world, the bill could affect hundreds of billions of dollars in sovereign debt, according to the report.
Supporters of the bill include debt-relief advocates who argue that it would deter predatory investor lawsuits. They say that when investors buy distressed-country debt at steep discounts so they can sue for full repayment, they drain money from countries that are already in crisis, per the report.
Opponents of the bill include financial industry groups that say it would threaten New York’s status as a financial center, the report said.
The sponsor of the Assembly bill, Jessica Gonzalez-Rojas, said in the report that Assembly leaders have not committed to move the bill along.
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“We haven’t gotten express commitments, but we have been having really positive conversations, and we have a lot of support amongst members of the assembly, so we’re really pushing to get it over the finish line,” Gonzalez-Rojas said.
A similar bill died in the Assembly last year after being passed by the Senate, per the report.
The MFA, a trade association for the global alternative asset management industry, said in a May 29 press release that it and six other financial services trade associations said in a joint letter that they oppose the bill because it would increase the cost of capital for sovereign borrowers, incentivize sovereign borrowers to force litigation where the champerty defense could be raised, and drive sovereign debt issuances and related activity to jurisdictions that compete with New York as global financial and legal centers.
“The coalition also warned that the bill could create broader unintended consequences for New York’s economy by discouraging financial market activity and reducing the state’s competitiveness,” MFA said in the release.
