NEW YORK (Reuters) -New York state lawmakers have only a few days before the legislative session ends for the year, and with no committee meetings left the fate of a controversial debt restructuring bill is now in the hands of the legislature leadership.

Hundreds of billions of dollars in bond contracts globally are on the line.

Below are facts about the proposal and potential ramifications.

WHY IS THIS IMPORTANT?

Unlike corporations or individuals, countries cannot declare bankruptcy and the current process of a debt restructuring can be costly both in time and money. The proposed bill looks to "provide effective mechanisms for restructuring sovereign and subnational debt" and the rewrite of this state law would retroactively affect sovereign debt contracts and its holders across the world.

A stronger, yet simpler international architecture for restructurings is needed, proof of which are attempts put together over the past decades by various stakeholders, most recently the Group of 20's Common Framework for Debt Treatments. The International Monetary Fund recently endorsed a key reform to promote its own "capacity to support countries undertaking debt restructurings."

The bill was repeatedly discussed during last month's meetings of the IMF and World Bank, with some stakeholders concerned about the implications of its eventual passage.

THE BILL'S INTENT

The bill aims to strengthen "the role of New York State as a primary location for the issuing and trading of sovereign debt." It also looks to discourage creditor holdouts - sometimes called vulture funds - by limiting their protection in state courts.

If enacted, it would empower countries eligible for debt relief initiatives to opt between a set mechanism for restructuring or a process that would limit bondholders' claims to those the United States would receive if it were a bilateral lender.

THE CONTROVERSY

While proponents and their backers see the bill as a straightforward way to skirt the complications of debt restructurings, its detractors say unintended consequences will make it even costlier for poor countries to borrow.

Trang Nguyen, London-based global head of emerging markets credit strategy at BNP Paribas, said earlier this month that upending the sovereign debt architecture without the input of the IMF, the Paris Club and others could be "quite detrimental."

"There is significant value in limiting how much a creditor can collect in a legal proceeding against a low-income country participating in a consensual debt-workout process," said in a blog post for the World Bank Lee Buchheit, who in 2012 led the legal teams advising Greece in the largest sovereign debt restructuring to date.

"The goal of the law should be to link the maximum permissible amount to the amounts recovered by other creditors under the Common Framework," he added, noting that the current bill is "light on detail" and too broad.

The bill could also trigger legal challenges and lead to the migration of sovereign debt away from New York to other jurisdictions according to law firm Cleary Gottlieb, which has advised both sovereigns and creditors in debt restructurings.

WHAT IS NEXT FOR THE BILL

Usually, a bill is initially discussed in committee, a small group of lawmakers in both the State Senate and Assembly. If passed, it would be separately discussed and voted by the full chambers.

With the state legislature, however, closing on June 6, committees will not meet again this year.

The only way for it to proceed now is for the leadership in both chambers to take it out of committee, and put it to a floor discussion and vote.

The office of Majority Leader Andrea Stewart-Cousins did not immediately respond to a request for comment.

The office of State Senator Gustavo Rivera, the bill's sponsor, said he was "working with the Senate Majority's leadership and stakeholders on potential movement for the bill."

If this happens over the coming week, and the bill is approved in the Senate and Assembly, it would then be sent to the governor who can sign or veto. A veto can be overturned by a two-thirds majority in both houses. Democrats hold such majorities, but both chambers are up for elections on Nov. 5.