§ 878 — Remedies of bondholders and noteholders

§ 878. Remedies of bondholders and noteholders. (1) In the event that\nthe agency shall default in the payment of principal or of interest on\nany issue of the bonds or notes after the same shall become due, whether\nat maturity or upon call for redemption, and such default shall continue\nfor a period of thirty days, or in the event that the agency shall fail\nor refuse to comply with the provisions of this title, or shall default\nin any agreement made with the holders of any issue of the bonds or\nnotes, the holders of twenty-five per centum in aggregate principal\namount of the bonds of such issue then outstanding, by instrument or\ninstruments filed in the office of the clerk of the county and proved or\nacknowledged in the same manner as a deed to be recorded, may appoint a\ntrustee to represent the holders of such bonds for the purposes herein\nprovided.\n (2) Such trustee may, and upon written request of the holders of\ntwenty-five per centum in principal amount of such bonds or notes, then\noutstanding shall, in his or its own name:\n (a) by suit, action or special proceeding enforce all rights of the\nbondholders or noteholders, including the right to require the agency to\ncollect revenues adequate to carry out any agreement as to, or pledge\nof, such revenues, and to require the agency to carry out any other\nagreements with the holders of such bonds or notes and to perform its\nduties under this title;\n (b) bring suit upon such bonds or notes;\n (c) by action or special proceeding, require the authority to account\nas if it were the trustee of an express trust for the holders of such\nbonds or notes;\n (d) by action or special proceeding, enjoin any acts or things which\nmay be unlawful or in violation of the rights of the holders of such\nbonds or notes;\n (e) declare all such bonds or notes due and payable, and if all\ndefaults shall be made good then with the consent of the holders of\ntwenty-five per centum of the principal amount of such bonds or notes\nthen outstanding, to annul such declaration and its consequences.\n (3) The supreme court shall have jurisdiction of any suit, action or\nproceeding by the trustee on behalf of bondholders or noteholders. The\nvenue of any such suit, action or proceeding shall be laid in the county\nin which the project or projects are located.\n (4) Before declaring the principal of all such bonds due and payable,\nthe trustee shall first give thirty days' notice in writing to the\nagency.\n (5) Any such trustee, whether or not the issue of bonds represented by\nsuch trustee has been declared due and payable, shall be entitled as of\nright to the appointment of a receiver of any part or parts of a\nproject, the revenues of which are pledged for the security of the bonds\nof such issue, and such receiver may enter and take possession of such\npart or parts of the project and, subject to any pledge or agreement\nwith bondholders or noteholders, shall take possession of all moneys and\nother property derived from or applicable to the acquisition,\nconstruction, operation, maintenance and reconstruction of such part or\nparts of the project and proceed with the acquisition of any necessary\nreal property in connection with the project that the agency has\ncovenanted to construct, and with any construction which the agency is\nunder obligation to do and to operate, maintain and reconstruct such\npart or parts of the project and collect and receive all revenues\nthereafter arising therefrom subject to any pledge thereof or agreement\nwith bondholders or noteholders relating thereto and perform the public\nduties and carry out the agreements and obligations of the agency under\nthe direction of the court. In any suit, action or proceeding by the\ntrustee, the fee, counsel fees and expenses of the trustee and of the\nreceiver, if any, shall constitute taxable disbursements and all costs\nand disbursements allowed by the court shall be a first charge on any\nrevenues derived from such project.\n (6) Such trustee shall, in addition to the foregoing, have and possess\nall of the powers necessary or appropriate for the exercise of any\nfunctions specifically set forth herein or incident to the general\nrepresentation of bondholders or noteholders in the enforcement and\nprotection of their rights.\n