N.Y. General Municipal Law § 878: Remedies of bondholders and noteholders

§ 878. Remedies of bondholders and noteholders. (1) In the event that

the agency shall default in the payment of principal or of interest on

any issue of the bonds or notes after the same shall become due, whether

at maturity or upon call for redemption, and such default shall continue

for a period of thirty days, or in the event that the agency shall fail

or refuse to comply with the provisions of this title, or shall default

in any agreement made with the holders of any issue of the bonds or

notes, the holders of twenty-five per centum in aggregate principal

amount of the bonds of such issue then outstanding, by instrument or

instruments filed in the office of the clerk of the county and proved or

acknowledged in the same manner as a deed to be recorded, may appoint a

trustee to represent the holders of such bonds for the purposes herein

provided.

(2) Such trustee may, and upon written request of the holders of

twenty-five per centum in principal amount of such bonds or notes, then

outstanding shall, in his or its own name:

(a) by suit, action or special proceeding enforce all rights of the

bondholders or noteholders, including the right to require the agency to

collect revenues adequate to carry out any agreement as to, or pledge

of, such revenues, and to require the agency to carry out any other

agreements with the holders of such bonds or notes and to perform its

duties under this title;

(b) bring suit upon such bonds or notes;

(c) by action or special proceeding, require the authority to account

as if it were the trustee of an express trust for the holders of such

bonds or notes;

(d) by action or special proceeding, enjoin any acts or things which

may be unlawful or in violation of the rights of the holders of such

bonds or notes;

(e) declare all such bonds or notes due and payable, and if all

defaults shall be made good then with the consent of the holders of

twenty-five per centum of the principal amount of such bonds or notes

then outstanding, to annul such declaration and its consequences.

(3) The supreme court shall have jurisdiction of any suit, action or

proceeding by the trustee on behalf of bondholders or noteholders. The

venue of any such suit, action or proceeding shall be laid in the county

in which the project or projects are located.

(4) Before declaring the principal of all such bonds due and payable,

the trustee shall first give thirty days' notice in writing to the

agency.

(5) Any such trustee, whether or not the issue of bonds represented by

such trustee has been declared due and payable, shall be entitled as of

right to the appointment of a receiver of any part or parts of a

project, the revenues of which are pledged for the security of the bonds

of such issue, and such receiver may enter and take possession of such

part or parts of the project and, subject to any pledge or agreement

with bondholders or noteholders, shall take possession of all moneys and

other property derived from or applicable to the acquisition,

construction, operation, maintenance and reconstruction of such part or

parts of the project and proceed with the acquisition of any necessary

real property in connection with the project that the agency has

covenanted to construct, and with any construction which the agency is

under obligation to do and to operate, maintain and reconstruct such

part or parts of the project and collect and receive all revenues

thereafter arising therefrom subject to any pledge thereof or agreement

with bondholders or noteholders relating thereto and perform the public

duties and carry out the agreements and obligations of the agency under

the direction of the court. In any suit, action or proceeding by the

trustee, the fee, counsel fees and expenses of the trustee and of the

receiver, if any, shall constitute taxable disbursements and all costs

and disbursements allowed by the court shall be a first charge on any

revenues derived from such project.

(6) Such trustee shall, in addition to the foregoing, have and possess

all of the powers necessary or appropriate for the exercise of any

functions specifically set forth herein or incident to the general

representation of bondholders or noteholders in the enforcement and

protection of their rights.