N.Y. Public Authorities Law § 1865: Rights and remedies of bondholders and noteholders

§ 1865. Rights and remedies of bondholders and noteholders. The

holders of bonds and notes shall have the following rights and remedies,

subject to the terms of the resolution authorizing such bonds and notes

or any trust indenture, secured loan agreement or other instrument

related thereto:

1. In the event that the authority shall default in the payment of

principal of or interest on any issue of 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 authority shall fail or refuse to comply with the provisions of

this title, or shall default in any contract made with the holders of

any issue of bonds or notes, the holders of twenty-five per centum in

aggregate principal amount of the bonds or notes of such issue then

outstanding, by instrument or instruments filed in the office of the

clerk in the county of Albany and approved or acknowledged in the same

manner as a deed to be recorded, may appoint a trustee to represent the

holders of such bonds or notes 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 authority

to collect fees, rentals and charges adequate to carry out any

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 suit in equity, 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 suit in equity, enjoin any act 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. Such trustee, whether or not the issuance of bonds or notes

represented by such trustee had been declared due and payable, shall be

entitled as of right to the appointment of a receiver of any property of

the authority, the fees, rentals, charges or other revenues of which are

pledged for the security of the bonds or notes of such issue and such

receiver may enter and take possession of such property, or any part or

parts thereof and operate and maintain the same and receive all fees,

charges, rentals and other revenues thereafter arising therefrom and

exercise such other powers of the authority as the court may deem

advisable and perform the public duties and carry out the agreements and

obligations of the authority under the direction of the court. In any

suit, action or proceeding by the trustee the fees, 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 fees, charges, rentals and other

revenues derived from such properties.

4. 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.

5. The supreme court shall have jurisdiction of any suit, action or

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

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

county of Albany.

6. Before declaring the principal of bonds or notes due and payable,

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

governor, to the authority, to the comptroller and to the

attorney-general of the state.