N.Y. Real Property Law § 120-a: Liquidation of mortgage by trustee

§ 120-a. Liquidation of mortgage by trustee. Any banking corporation

or individual acting as trustee in respect to any mortgage upon real

property against which bonds shall have been issued to the public and

which mortgage shall have been given to such trustee by a corporation

organized under the provisions of section one hundred twenty-one hereof,

pursuant to a plan of reorganization approved by the court and which

became effective under section one hundred twenty-two hereof, or which

mortgage shall have been given pursuant to a plan of reorganization

heretofore or hereafter approved and confirmed under the bankruptcy acts

of the United States, or which mortgage shall have been given to such

trustee under a voluntary plan of reorganization by a corporation caused

to be organized by a bondholders' committee for the purpose of acquiring

the property secured by such mortgage at a sale under a judgment of

foreclosure and sale of a prior mortgage given to secure bonds

theretofore issued to the public, may, with the approval of the supreme

court in the county where all or part of the property affected by such

mortgage is situate, sell, assign, discharge or satisfy such mortgage

upon such consideration in cash as the court shall deem fair and

equitable to the bondholders and as the court by order shall direct.

Such order may be made upon the application of the trustee or the holder

of twenty-five per cent of the bonds or of the mortgagor or owners of

the property securing such mortgage. The court may approve a sale,

assignment, discharge or satisfaction at such price as may appear to the

court to be fair and in the best interests of the bondholders and not

less than the cash value of said mortgage if sold at a public sale,

unless duly acknowledged dissents thereto by holders of more than

one-third of the principal amount of the bonds then outstanding have

been filed. If the application for such sale shall be consented to by

the holders of two-thirds of the principal amount of the bonds

outstanding such consent shall constitute a presumption that it is fair

and in the best interests of the bondholders that said mortgage be

liquidated at the price fixed in such consent and the court may approve

a sale at such amount unless it shall appear to the court that such

amount is less than the cash value of said mortgage if sold at a public

sale. If the application shall not be made by the trustee then notice

shall be given to the trustee and in any event the order directing

notice to the bondholders of the application to liquidate such mortgage

shall provide for personal service of such notice not less than thirty

days before the return date thereof upon not less than ten specified

bondholders whose addresses are known to the applicant and notice by

mail to all of the bondholders whose addresses are known and the

publication of such notice once a week on a week day for three

successive weeks preceding the return date thereof in one newspaper of

general circulation published in the city or county where the real

property securing said mortgage is located. Except as herein otherwise

provided all proceedings hereunder and the rights of the parties hereto,

shall be governed by section one hundred twenty-two hereof; except that

if the order shall become effective it shall be without prejudice to the

right of any particular bondholder who has filed a duly acknowledged

dissent therefrom, within the time fixed in the order, to have the court

determine the cash value of the mortgage securing such bond if sold at a

public sale and providing for the payment or securing his ratable share

of such amount as a condition for declaring the order effective.

If any provision of this section or of section one hundred twenty-two

hereof or any clause, sentence, paragraph or any part of such section or

the application thereof to any person or circumstance shall be held

unconstitutional or invalid, such decision or judgment shall not affect

or impair the constitutionality or validity of the remainder thereof,

but shall be confined in its operation to the clause, sentence,

paragraph or part thereof directly involved in such decision or

judgment.