AI-assisted research summary: This section gives bondholders and trustees remedies after a default or related breach, but limits them from disposing of the authority’s assets.
Sec. 601.034. RIGHTS AND REMEDIES OF BONDHOLDER. (a) The rights and remedies of a bondholder under this section are in addition to any rights and remedies lawfully granted to the bondholder by a resolution providing for the issuance of bonds or by a deed of trust under which bonds are issued. (b) If an authority fails to pay the principal of or interest on a bond on or before the 60th day after the date payment is due, violates this chapter, or breaches another agreement with a bondholder, the holders of 25 percent of the aggregate principal amount of the bonds outstanding may appoint a trustee to represent the bondholders. To appoint a trustee, the bondholders must file in the office of the recorder of deeds of the county in which the authority is located an instrument that is proved or acknowledged in the same manner as required by law for a deed to be recorded. (c) The trustee appointed under this section or a trustee under a deed of trust under this subchapter may, and on written request of the holders of 25 percent of the aggregate principal amount of the bonds outstanding, unless provided otherwise by the deed of trust, shall, in the trustee's own name: (1) bring an action to enforce the rights of the bondholders; (2) bring suit on the bonds; (3) require the authority to account as if it were the trustee of an express trust for the bondholders; or (4) sue to enjoin violations of law or the rights of the bondholders. (d) By notice in writing to the authority the trustee may declare bonds due and payable. If the authority cures all defaults, the trustee, with the consent of the holders of 25 percent of the aggregate principal amount of the bonds then outstanding, unless provided otherwise by the deed of trust, may rescind the declaration. (e) A district court in the county in which the authority is located has jurisdiction of an action by the trustee. A trustee appointed or acting under a deed of trust is entitled to the appointment of a receiver, who may enter and take possession of all or part of the facilities of the authority and the revenues or receipts that may be applicable to the payment of the bonds in default, and who may operate and maintain the facilities and collect and receive rent and other revenues of the facilities. The receiver shall deposit the money in a separate account and apply it in the manner the court directs. In an action by the trustee, any fees, attorney's fees, and expenses of the trustee and the receiver and the costs and disbursements allowed by the court are a first charge on the revenues and receipts from the facilities of the authority that are applicable to the payment of the bonds in default. The trustee may exercise the powers necessary or appropriate for carrying out the trustee's functions under this section or incident to the general representation of the bondholders in the enforcement and protection of their rights. (f) This subchapter does not authorize a bondholder or a receiver or trustee appointed under this subchapter to sell, assign, mortgage, or otherwise dispose of the assets of the authority. A receiver may only operate and maintain the facilities of the authority as the court directs. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Local Government Code, Section 431.034 by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 3.76(d)(2), eff. April 1, 2009.