AI-assisted research summary: This section lets bond documents set default terms and gives the trustee and certain bondholders specific remedies after a default.
Sec. 8502.018. DEFAULT PROCEDURES. (a) A resolution authorizing the issuance of bonds and any indenture or agreement entered into under the resolution may include provisions regarding a default on the: (1) payment of the interest on any bonds as the interest becomes due and payable; (2) payment of the principal of any bonds as they become due and payable, whether at maturity, by call for redemption, or otherwise; or (3) performance of an agreement made with the purchasers or successive holders of any bonds. (b) If a default described by Subsection (a) has occurred and has continued for a period, if any, prescribed by the resolution authorizing the issuance of the bonds, the trustee under an indenture entered into with respect to the bonds authorized by the resolution, or, if there is no indenture, a trustee appointed in the manner provided in the resolution by the holders of 25 percent in aggregate principal amount of the bonds authorized by the resolution and then outstanding may, and on the written request of the holders of 25 percent in aggregate principal amount of the bonds authorized by the resolution and then outstanding shall, in the trustee's own name but for the equal and proportionate benefit of the holders of all the bonds, and with or without having possession of the bonds: (1) by mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the bondholders; (2) bring suit on the bonds or the appurtenant coupons; (3) by action or suit in equity, require the board to act as if it were the trustee of an express trust for the bondholders; (4) by action or suit in equity, enjoin any acts or things that may be unlawful or in violation of the rights of the bondholders; or (5) after such notice to the board as the resolution may provide, declare the principal of all of the bonds due and payable, and if all defaults have been made good, then with the written consent of the holders of 25 percent in aggregate principal amount of the bonds then outstanding, annul the declaration and its consequences; provided, however, that the holders of more than a majority in principal amount of the bonds authorized by the resolution and then outstanding shall, by written instrument delivered to the trustee, have the right to direct and control any and all actions taken or to be taken by the trustee under this section. (c) A resolution, indenture, or agreement relating to bonds may provide that in a suit, action, or proceeding under this section, the trustee, whether or not all of the bonds have been declared due and payable and with or without possession of any of the bonds, is entitled as of right to the appointment of a receiver who may enter and take possession of all or part of the properties of the authority, operate and maintain the properties, and set, collect, and receive rates and charges sufficient to provide revenues adequate to pay the items specified in the resolution authorizing bonds and the costs and disbursements of the suit, action, or proceeding and apply that revenue in conformity with this chapter and the resolution authorizing the bonds. (d) In a suit, action, or proceeding by a trustee or receiver, if any, under this section, counsel fees and expenses of the trustee and of the receiver, if any, constitute taxable disbursements, and all costs and disbursements allowed by the court shall be a first charge on any revenue pledged to secure the payment of the bonds. (e) Subject to the provisions of the constitution, the courts of McLennan County have jurisdiction of a suit, action, or proceeding under this section by a trustee on behalf of the bondholders and of all proceedings involved in the suit, action, or proceeding. (f) In addition to the powers specifically provided by this section, the trustee has all powers necessary or appropriate for the exercise of the powers specifically provided or incident to the general representation of the bondholders in the enforcement of their rights. Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1, 2003. Renumbered from Water Code, Section 221.018 by Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 13.006(a), eff. September 1, 2007.