N.Y. Public Authorities Law Section 3561
Remedies of bondholders


Subject to any resolution or resolutions adopted pursuant to this title:

1.

In the event that the corporation shall default in the payment of principal of or interest on any issue of bonds 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 corporation 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, the holders of twenty-five percent 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 in which the principal office of the corporation 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 for the purpose herein provided.

2.

Such trustee may, and upon written request of the holders of twenty-five per centum in principal amount of such bonds outstanding shall, in its own name:

(a)

by action or proceeding in accordance with the civil practice law and rules, enforce all rights of the bondholders, including the right to require the corporation to collect rents, rates, fees and charges adequate to carry out any agreement as to, or pledge of, such rents, rates, fees and charges and to require the corporation to carry out any other agreements with the holders of such bonds to perform its duties under this title;

(b)

bring an action or proceeding upon such bonds;

(c)

by action or proceeding, require the corporation to account as if it were the trustee of an express trust for the holders of such bonds;

(d)

by action or proceeding, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of such bonds; and

(e)

declare all such bonds due and payable, and if all defaults shall be made good, then with the consent of the holders of the twenty-five per centum of the principal amount of such bonds then outstanding, to annul such declaration and its consequences.

3.

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 in the enforcement and protection of their rights.

4.

The supreme court shall have jurisdiction of any suit, action or proceeding by the trustee on behalf of the bondholders. The venue of any such suit, action or proceeding shall be laid in Erie county.

5.

Before declaring the principal of bonds due and payable, the trustee shall first give thirty days notice in writing to the corporation.

6.

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 any receiver of any part or parts of the 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 the holders of such bonds, shall take possession of all moneys and other property derived from such part or parts of the project and proceed with any construction thereon or the acquisition of any property, real or personal, in connection therewith that the corporation 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 or agreement with bondholders relating thereto and perform the public duties and carry out the agreements and obligations of the corporation 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 revenues derived from the properties.

Source: Section 3561 — Remedies of bondholders, https://www.­nysenate.­gov/legislation/laws/PBA/3561 (updated Sep. 22, 2014; accessed Jul. 20, 2024).

Accessed:
Jul. 20, 2024

Last modified:
Sep. 22, 2014

§ 3561’s source at nysenate​.gov

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