§ 1686 — Remedies of bondholders

§ 1686. Remedies of bondholders. 1. In the event that the authority\nshall default in the payment of principal of or interest on any of the\nbonds after the same shall become due, whether at maturity or upon call\nfor redemption, and such default shall continue for a period of thirty\ndays, or in the event that the authority shall fail or refuse to comply\nwith the provisions of this title, or shall default in any agreement\nmade with the holders of the bonds, the holders of twenty-five per\ncentum in aggregate principal amount of the bonds then outstanding by\ninstrument or instruments filed in the office of the clerk of the county\nin which the dormitory is located and proved or acknowledged in the same\nmanner as a deed to be recorded may appoint a trustee to represent the\nbondholders for the purposes herein provided;\n 2. Such trustee may, and upon written request of the holders of\ntwenty-five per centum of the principal amount of the bonds then\noutstanding upon any dormitory shall, in his or its own name\n (a) by suit, action or special proceeding enforce all rights of the\nbondholders, including the right to require the authority and the board\nto collect rental and other revenues of any dormitory adequate to carry\nout any agreement as to, or pledge of, such rental and other revenues,\nand to require the authority and the board to carry out any other\nagreements with the bondholders and to perform its and their duties\nunder this title;\n (b) bring suit upon the bonds;\n (c) by action or suit in equity, require the authority to account as\nif it were the trustee of an express trust for the bondholders;\n (d) by action or suit in equity, enjoin any acts or things which may\nbe unlawful or in violation of the rights of the bondholders;\n (e) declare all bonds due and payable upon any dormitory, and if all\ndefaults shall be made good, annul, upon the written consent of the\nholders of twenty-five per centum in principal amount of the bonds then\noutstanding, 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 the bondholders. The venue of any\nsuch suit, action or proceeding shall be laid in the county in which the\ndormitory is located.\n 4. Before declaring the principal of all bonds due and payable the\ntrustee shall first give thirty days' notice in writing to the\nauthority.\n 5. Any such trustee, whether or not all bonds have been declared due\nand payable, shall be entitled as of right to the appointment of a\nreceiver who may enter and take possession of the dormitory or any part\nor parts thereof and operate and maintain the same and collect and\nreceive all rentals and other revenues thereafter arising therefrom in\nthe same manner as the authority itself might do and shall deposit all\nsuch moneys in a separate account and apply the same in such manner as\nthe court shall direct. In any suit, action or proceeding by the trustee\nthe fees, counsel fees and expenses of the trustee and of the receiver,\nif any, shall constitute taxable disbursements and all costs and\ndisbursements allowed by the court shall be a first charge on any\nrentals and other revenues derived from the dormitory.\n 6. Such trustees 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 the bondholders in the enforcement and protection of\ntheir rights.\n