KRS § 76.261 — KY Code / Title IX / Chapter 76 / Section 76.261
76.261 Default on revenue bonds -- Trustee appointed -- Actions by trustee, receiver, powers
Status: in_force

76.261 Default on revenue bonds -- Trustee appointed -- Actions by trustee,

receiver, powers.

(1) The holders in aggregate principal amount of twenty percent (20%) of any class of

construction subdistrict bonds authorized by KRS 76.254 may ex parte move a

judge of the Circuit Court of the county containing the construction subdistrict to

appoint a trustee to represent all of the holders of the same class of bonds when the

facts described in paragraph (b) of subsection (2) have occurred.

(2) The judge shall appoint a trustee (which may be corporate) upon a showing that:

(a) Movants in fact are holders of twenty percent (20%) or more of the aggregate

principal amount of the affected class of the bonds;

(b) Movants claim that there has been a default exceeding thirty (30) days in the

payment of interest or principal on the bonds, that the district has failed to

comply with the provisions of KRS 76.005 to 76.295 relating to construction

subdistrict bonds, or that the district has breached a contract with the holders

of the bonds; and

(c) Movants have filed in the office of the county clerk of the county containing

the district an instrument in the nature of a notice of action against the district

which instrument states that movants have applied to have a trustee appointed

pursuant to this section and which names the affected construction subdistrict.

(3) The trustee may, or upon written request of any twenty percent (20%) in aggregate

principal amount of his bondholder beneficiaries shall, file an action in his name

against the district; the action shall seek all remedies, including but not limited to

mandamus, prohibition, judgment against a special fund or funds, injunction, and

declaratory judgment, needed to preserve and enforce the rights of the bondholders.

The action shall be filed in the Circuit Court of the county containing the district.

(4) The rights of bondholders include, but are not limited to, the right to:

(a) Require the district to collect from the construction subdistrict rates, rentals,

and charges adequate to pay principal and interest on the bonds;

(b) Require the district to perform all lawful agreements with the bondholders;

(c) Require the district to account to the bondholders as if it were trustee of an

express trust for their benefit;

(d) Have the district enjoined from doing any acts or things which may be

unlawful or in violation of the rights of the bondholders;

(e) Have all bonds of the affected class declared due and payable.

(5) Any trustee, whether or not all bonds have been declared due and payable, shall be

entitled as of right, upon application to the Circuit Court, to the appointment of a

receiver, who may enter upon and take possession of the construction subdistrict

facilities, or any part thereof, and operate and maintain the same, and collect and

receive all rentals, rates, other charges, and revenues of the construction subdistrict

payable after commencement of the receivership. The receiver shall deposit such

moneys in a separate account and apply them as the court directs. 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 disbursements taxable as costs. All costs and

disbursements allowed by the court shall be a first charge on any revenue derived

from the construction subdistrict facilities. 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 the bondholders in the enforcement and protection of their rights.