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220.591 Default on revenue bonds -- Trustee appointed -- Actions by trustee,
receiver, powers.
(1)
(2)
(3)
(4)
(5)
The holders in aggregate principal amount of twenty percent (20%) of any class of
construction subdistrict bonds authorized by KRS 220.577 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.
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 220.553 to 220.613 relating to
construction subdistrict bonds, or that the district has breached a contract with
the holders of the bonds;
(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.
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.
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.
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 cost. 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.
Effective: June 17, 1978
History: Amended 1978 Ky. Acts ch. 384, secs. 82 and 360, effective June 17, 1978. -Created 1966 Ky. Acts ch. 92, sec. 19.
Legislative Research Commission Note. This section was amended by two sections of
ch. 384 of Acts 1978 which do not appear to be in conflict and have been compiled
together.
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