Virginia Law

A. The provisions of this section shall apply to an issuance of bonds only if the resolution authorizing such bonds provides that the bondholders are entitled to all the benefits of and subject to the provisions of this section.

B. If any institution (i) defaults on the payment of principal of or interest on any series of its bonds after the payment becomes due, whether at maturity or upon call for redemption, and such default continues for a period of 30 days; (ii) fails or refuses to comply with the provisions of this chapter; or (iii) defaults on any agreement made with the bondholders of any series, the holders of 25 percent of the aggregate principal amount of the bonds of such series then outstanding, by instrument filed with the Governor and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the bondholders of such series for the purposes provided in this section.

C. The trustee may, and upon written request of the holders of 25 percent of the aggregate principal amount of the bonds of such series then outstanding shall, in his own name:

1. By mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the bondholders of such series, including the right to require such institution and its board to (i) collect fees, rents, charges, or other revenues adequate to carry out any agreement as to, or pledge of, such revenues or (ii) carry out and perform any other agreements with the bondholders of such series and their duties under this chapter;

2. Bring suit upon such bonds;

3. By action or suit in equity, require such institution to account as if it were the trustee of an express trust for the bondholders; and

4. By action or suit in equity, enjoin any acts that may be unlawful or in violation of the rights of the bondholders.

D. If the resolution that authorizes any bond contains the provision required by subsection A and provides that any trustee appointed by the bondholders pursuant to this section has the powers provided by this subsection, then any such trustee, whether or not all such bonds have been declared due and payable, is entitled to the appointment of a receiver who may (i) enter and take possession of any property of the institution from which any of the revenues are pledged for the security of the bonds of the holders that are represented by such trustee, (ii) operate and maintain such property, and (iii) collect and receive all fees, rents, charges, and other revenues arising from such property in the same manner as the institution is permitted to do and shall deposit all such moneys in a separate account and apply all such moneys in such manner as the court directs. In any suit, action, or proceeding by the trustee, any fees, counsel fees, and expenses of the trustee and receiver shall constitute taxable costs and disbursements and all costs and disbursements allowed by the court shall be a first charge on any fees, rents, charges, and other revenues of the institution that are pledged for the security of the bonds.

E. Each trustee appointed pursuant to subsection B has 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 he represents in the enforcement and protection of their rights.

1933, p. 87, § 23-20; 1946, p. 186; 2016, c. 588.