N.Y. Public Authorities Law § 2440: Remedies of bondholders and noteholders

§ 2440. 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 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 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 of the county in which the

principal office of the agency is located, 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 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) enforce all rights of the bondholders or noteholders, including

the right to require the agency to collect interest and principal

payments on the bonds held by it adequate to carry out any agreement as

to, or pledge of, such interest and principal payments, 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 suit, require the agency 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, 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) Such trustee shall in addition to the foregoing have and possess

all the powers necessary or appropriate for the exercise of any

functions specifically set forth herein or incident to the general

representation of bondholders in the enforcement and protection of their

rights.

(4) 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 agency and to the attorney general of the state.

(5) 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 principal office of the agency is located.

(6) The remedies granted by this section shall not apply to tax lien

collateralized securities. The remedies available to the holders of such

securities shall be expressly limited to those set forth in the contract

with the owners of such securities.