§ 3860. Remedies of bondholders

(a) If the Agency defaults in the payment of principal of or interest on any of the bonds of any series after they become due, either at maturity or upon call for redemption, and the default continues for a period of 30 days, or if the Agency fails or refuses to comply with this chapter or defaults in any agreement made with the holders of the bonds of the series, the holders of 25 percent in aggregate principal amount of the bonds of the series then outstanding, in addition to all other remedies provided pursuant to this chapter or other law, may appoint by an instrument filed in an office of the clerk of the county in which the principal office of the eligible institution respecting which the bonds have been issued is located, and proved or acknowledged in the same manner as a deed would be recorded, subject to the limitation specified in subsection 3856(h) of this chapter, a trustee to represent the holders of the bonds of the series for the purposes provided in this section.

(b) The trustee may, and upon written request of the holders of 25 percent of the principal amount of the bonds of any series then outstanding upon any facility, shall, in his or her or its own name:

(1) by mandamus or other suit, action, or proceeding, enforce all rights of the bondholders, including the right to require the Agency to collect rentals and other revenues of any facility adequate to carry out any agreement as to, or pledge of, the rental and other revenues, and to require the Agency to carry out any other agreements with the bondholders and to perform its and their duties under this chapter;

(2) bring suit upon the bonds of that series;

(3) by action or suit, require the Agency to account as if it were the trustee of an express trust for the bondholders;

(4) by action or suit, enjoin any acts or things that may be unlawful or violate the rights of the bondholders; and

(5) declare all bonds of that series due and payable upon any facility; and, if all defaults are made good, annul, upon the written consent of the holders of 25 percent in principal amount of the bonds of that series then outstanding, the declaration and its consequences.

(c) The Superior Court and the presiding judge where the facility is located shall have jurisdiction of any suit, action, or proceedings by the trustee on behalf of the bondholders.

(d) Before declaring the principal of all bonds of any series due and payable, the trustees shall first give 30 days’ notice in writing to the Agency.

(e) Any trustee, whether or not all bonds of any series have been declared due and payable, shall be entitled as of right to the appointment of a receiver who may enter and take possession of the facility or any part of the facility and operate and maintain it and collect and receive all rentals and other revenues arising from it in the same manner as the Agency itself might do, and shall deposit all such monies in a separate account and apply the same in such manner as the court may direct. In any suit, action, or proceedings 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 rentals and other revenues derived from the facility.

(f) The trustee shall, in addition to the provisions of this section relating to the trustee and to an extent not inconsistent with the provisions of the trust indenture or resolutions under which such trustee is acting, have all of the powers necessary or appropriate for the exercise of any functions specifically set forth in this section or incident to the general representation of the bondholders in the enforcement and protection of their rights, including the foreclosure of any mortgage given to secure the bonds and the power to liquidate any and all other security as may be given therefor. (Added 1966, No. 56 (Sp. Sess.), § 11, eff. March 12, 1966; amended 1969, No. 224 (Adj. Sess.), § 8, eff. March 31, 1970; 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974; 2019, No. 131 (Adj. Sess.), § 118.)