NY A07562

Adds Article 7 to the Banking Law establishing a framework for restructuring unsustainable sovereign and subnational debt through voluntary petitions filed with a supervisory authority referred by the New York State Senate Finance Committee.

Requires states seeking relief to certify they have not previously sought similar relief in the past 10 years, agree to restructure unsustainable claims, and enact necessary national or subnational laws to effectuate these agreements.

Mandates a comprehensive audit of public debt contracting and refinancing conducted by an independent body chosen by the supervisory authority, with costs borne by the state and following International Standards of Supreme Audit Institutions 100.

Establishes that a debt restructuring plan becomes effective and binding when agreed to by each class of creditors holding at least two-thirds in amount and more than one-half in number of claims in their class, and requires states to notify all creditors within 30 days of filing a petition.

Allows states to borrow money during restructuring with creditor approval (two-thirds in amount), and gives restructuring loans priority repayment status over other claims, provided covered creditors holding two-thirds in principal amount approve the subordination arrangement.