N.Y. Real Property Law § 123: Preserving existing rights

§ 123. Preserving existing rights. Nothing in this act shall be deemed

to prevent any bondholder or committee of bondholders from bidding at

the foreclosure sale and in case he or they should be a successful

bidder, from applying upon the purchase price the bonds held by him or

them at the amount distributable thereon and reorganizing the property

so purchased in any manner which was lawful prior to the enactment of

this act, nor to impair any previously existing right of a trustee so to

purchase and pay for the property, or to preclude any trustee which

shall have purchased such property from submitting to the court a plan

for its reorganization. The court may provide for the qualification of

bidders other than the trustee by requiring them to deposit with the

officer conducting the sale in advance of bidding up to ten per centum

of the amount of their bid in cash or in bonds taken at the principal

amount thereof. In any action now or hereafter pending for the

foreclosure of any such mortgage or indenture, the property shall, on

application of the trustee, be sold subject to the lien of any taxes,

assessments and water rates, any prior lien, or to any liens which may

thereafter be established, which are the subject of litigation pending

at the time of the sale, provided a brief statement thereof is contained

in the notice of sale.