§ 121 — Reorganization of property covered by trust mortgage

§ 121. Reorganization of property covered by trust mortgage. Such\nbanking corporation, under the direction of the court in the foreclosure\naction may, and if directed by the court shall, purchase or cause to be\npurchased said real property, pursuant to a reorganization plan, and\ncause to be formed a domestic business corporation, or a foreign\ncorporation providing such foreign corporation is authorized to do\nbusiness within this state, or utilize any other such corporation,\nproviding the corporation so formed or utilized shall have provided in\nits certificate of incorporation the restriction set forth in section\none hundred eleven of decedent estate law, and shall thereupon grant and\nrelease said property to such new corporation and its assigns forever,\nor by assignment of its bid to such new corporation, or otherwise, cause\nthe referee's deed in foreclosure to be executed and delivered directly\nto such new corporation granting and releasing such property to it and\nits assigns forever, in exchange for the stocks, bonds and other\nsecurities of such new corporation except such of said securities as may\nbe reserved for the adjustment of liens and claims against said\nproperty, or for other purposes as specified in the plan, including any\nprovision made in a plan approved by the court and thereafter becoming\neffective as provided in section one hundred twenty-two for any\ninterest, junior or subordinate to the mortgage foreclosed; provided,\nhowever, that such new corporation shall be authorized to raise money by\nmortgage, pledge, borrowing, sale of securities or otherwise to the\nextent which may be set forth in the plan of reorganization. The\ntrustee, upon receiving such securities and any cash available from the\nnew corporation, shall distribute the same and any other funds or\nproperty constituting part of the trust estate, ratably amongst those\nparties interested in such mortgage, deed of trust or indenture less\nsuch trustee's proper expenses and charges in connection therewith; and\nthereupon the trustee upon the filing and approval of its accounts in\nthe foreclosure action and upon assigning to such new corporation any\ndeficiency judgment and any guarantees and insurance policies held by\nthe trustee and any claim for waste or otherwise in connection with the\nmortgage estate, shall be discharged of any further obligation or\nliability under such mortgage or indenture or otherwise. Nothing herein\ncontained shall affect or impair the liability of any guarantor or any\nright or remedy existing in favor of any holders of bonds, notes,\ncertificates or other securities which are secured by or participate in\nsuch mortgages, deeds of trust or indentures.\n