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New York bill would rewrite rules for sovereign debt restructurings

Proponents say bill will help developing countries, but critics say China will benefit

The New York State Supreme Court courthouse in New York City. More than half the world's privately held sovereign debt comes under New York state law jurisdiction.   © Reuters

NEW YORK -- Legislation under consideration in New York state stands to rattle sovereign debt workouts by requiring private creditors take the same losses the U.S. government would as a sovereign creditor instead of holding out for a better deal.

Proponents of the bill say it would simplify a process that often gets bogged down in lengthy legal battles, help developing countries get over immense debt burdens and curtail so-called vulture funds that seek to profit off the process.

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