§ 3243 — Remedies of bondholders and noteholders

§ 3243. Remedies of bondholders and noteholders. 1. Subject to the\nprovisions of section three thousand two hundred thirty-six of this\ntitle, in the event that the corporation shall default in the payment of\nprincipal of or interest on or sinking fund payment on any issue of\nbonds or notes after the same shall become due, whether at maturity or\nupon call for redemption, or in the event that the corporation or the\nstate shall default in any agreement made with the holders of any issue\nof bonds or notes, the holders of twenty-five per centum in aggregate\nprincipal amount of the bonds or notes of such issue then outstanding,\nby instrument or instruments filed in the office of the clerk of the\ncounty of Albany and proved or acknowledged in the same manner as a deed\nto be recorded, may appoint a trustee to represent the holders of such\nbonds or notes for the purposes herein provided.\n 2. Such trustee, or any trustee appointed under section three thousand\ntwo hundred thirty-six of this title, may, and upon written request of\nthe holders of twenty-five per centum in principal amount of such bonds\nor notes then outstanding shall, in his or its own name:\n (a) by suit, action or proceeding in accordance with the civil\npractice law and rules, enforce all rights of the bondholders or\nnoteholders, including the right to require the corporation to carry out\nany agreement with such holders and to perform its duties under this\ntitle;\n (b) bring suit upon such bonds and notes;\n (c) by action or suit, require the corporation to account as if it\nwere the trustee of an express trust for the holders of such bonds or\nnotes;\n (d) by action or suit, enjoin any acts or things which may be unlawful\nor in violation of the rights of the holders of such bonds or notes; and\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 annul such declaration and its consequences provided,\nhowever, that nothing herein shall preclude the corporation from\nagreeing that consent of the provider of a bond or note facility is\nrequired for an acceleration of related bonds or notes in the event of a\ndefault other than a failure to pay principal of or interest on the\nbonds or notes when due.\n 3. The supreme court shall have jurisdiction of any suit, action or\nproceeding by the trustee on behalf of such bondholders or noteholders.\nThe venue of any such suit, action or proceeding shall be laid in the\ncounty of Albany.\n 4. Before declaring the principal of bonds or notes due and payable,\nthe trustee shall first give thirty days' notice in writing to the\ncorporation, the governor, the comptroller, the temporary president of\nthe senate, the speaker of the assembly and to the attorney general of\nthe state.\n