Committee advances bill aimed at limiting 'vulture' sovereign‑debt lawsuits after extended debate

The Judiciary Committee advanced Senate Bill 1477, a proposal to restrict the purchase of sovereign‑debt claims by investors who acquire distressed foreign debt with the apparent intent of litigating for profit.

Sponsor Senator Krueger said the measure is narrowly tailored and intended to curb a small number of investors who buy debt at heavy discounts and then pursue aggressive suits in New York courts. "You can only use this if a federal judge decides the investor bought the bond with the intent and purpose to sue, not to follow through on the deal as it was written," Krueger said, arguing the change undoes a 2004 law that opened New York to exploitative practices.

Senator Lambo, who initiated the questioning, said he had heard concerns that the bill could be drafted too broadly and might reach ordinary creditors or large commercial loans. "I think there are, it's about $700,000,000 worth of these loans that are issued from New York," Lambo said, pressing the sponsor to confirm that the measure targets predatory purchasers rather than legitimate lenders.

Other members urged caution. One committee member asked whether the bill would risk curtailing ordinary lenders' rights to repayment or sweep in consumer or corporate loans. Krueger responded that the bill requires evidence of predatory intent — for example, buying debt to sue rather than to collect under the original bargain — and said the measure would apply only in exceptional cases identified by a federal court.

Committee members agreed to move the bill out of committee for further consideration; the sponsor offered to provide members with additional briefing materials and supporting memos. The measure was advanced by motion for further action in the legislative process.

The next procedural step for the measure is committee reporting and further floor consideration, where members said they expected additional debate and potential technical refinements.