Protection of Bond and Noteholders

V.S.A. tit. 24, ch. 119, subch. 7

in effect

24 V.S.A. § 4701 Rights of holders paramount

4701. Rights of holders paramount In order to carry out its purpose under this chapter of making loans to governmental units, by purchase of the municipal bonds or revenue bonds of those governmental units, and by receipt of its income from service charges and from payments of interest on the maturing principal of municipal bonds or revenue bonds purchased and held by it, and in order to produce revenues or income to the Bank sufficient at all times to meet its costs and expenses of operation under this chapter and to pay the principal of and interest on its outstanding bonds and notes when due, the Bank must at all times, and to the greatest extent possible, so plan to issue its bonds and notes and so lend money to governmental units by the purchase of municipal bonds or revenue bonds of governmental units so that the purpose is achieved without in any way jeopardizing any rights of the holders of bonds or notes of the Bank or affecting other matters under this chapter. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 30, eff. May 15, 1987.

24 V.S.A. § 4702 Default in payment

4702. Default in payment If the Bank defaults in the payment of principal or interest on any issue of notes or bonds after they become due, whether at maturity or upon call for redemption, and the default continues for thirty days, or if the Bank fails or refuses to comply with this chapter or defaults in any agreement made with the holders of any issue of notes or bonds, the holders of 25 per centum in aggregate principal amount of the outstanding notes or bonds of that issue, by instrument filed in the Office of the Clerk of the County of Washington and executed in the same manner as a deed to be recorded, may appoint a trustee to represent the holders of those notes or bonds for the purposes herein provided. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

24 V.S.A. § 4703 Powers of trustee on default

4703. Powers of trustee on default A trustee appointed under section 4702 of this title may, and shall in the trustee’s name, upon written request of the holders of 25 per centum in principal amount of the outstanding notes or bonds: (1) by suit, action, or proceeding, enforce all rights of the noteholders or bondholders, including the right to require the Bank to collect rates, charges, and other fees and to collect interest and amortization payments on loans made to governmental units and on municipal bonds, revenue bonds, and notes held by it adequate to carry out any agreement as to, or pledge of, the rates, charges, and other fees and of the interest and amortization payments, and to require the Bank to carry out any other agreements with the holders of the notes or bonds and to perform its duties under this chapter; (2) bring suit upon the notes or bonds; (3) by action or suit, require the Bank to account as if it were the trustee of an express trust for the holders of the notes or bonds; (4) by action or suit in equity, enjoin anything that may be unlawful or in violation of the rights of the holders of the notes or bonds; (5) declare all the notes or bonds due and payable, and if all defaults are made good, then with the consent of the holders of 25 per centum of the principal amount of the outstanding notes or bonds, annul the declaration and its consequences; (6) the trustee shall in addition to the foregoing have all the powers necessary for the exercise of any functions specifically set forth herein or incident to the general representation of bondholders or noteholders in the enforcement and protection of their rights. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 31, eff. May 15, 1987; 2023, No. 72, § 31, eff. June 19, 2023.

24 V.S.A. § 4704 Superior Court jurisdiction

4704. Superior Court jurisdiction The Superior Courts have jurisdiction of any suit, action, or proceeding by a trustee on behalf of noteholders or bondholders. The venue of any suit, action, or proceeding shall be laid in the County of Washington. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974.

24 V.S.A. § 4705 Notice on default

4705. Notice on default Before declaring the principal of notes or bonds due and payable, the trustee must first give 30 days’ notice in writing to the Governor, the Bank, the State Treasurer, and the Attorney General of the State. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

24 V.S.A. § 4706 Personal liability

4706. Personal liability Neither the members of the Bank nor any person executing bonds or notes issued under this chapter are liable personally on the bonds or notes. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

24 V.S.A. § 4707 Exemption from execution and sale

4707. Exemption from execution and sale All property of the Bank is exempt from levy and sale by virtue of an execution and no execution or other judicial process may issue against it nor may any judgment against the Bank be a charge or lien upon its property, but nothing herein contained shall apply to or limit the rights of the holder of any bonds or notes to pursue any remedy for the enforcement of any pledge or lien given by the Bank on its revenues or other monies. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

24 V.S.A. § 4708 Pledge of revenues; lien thereof

4708. Pledge of revenues; lien thereof Any pledge of revenues or other monies made by the Bank is binding from the time when the pledge is made. Revenues or other monies so pledged and thereafter received by the Bank shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge is binding against all parties having claims of any kind in tort, contract, or otherwise against the Bank, irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be filed or recorded except in the records of the Bank. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

24 V.S.A. § 4709 Federal insurance or guaranty

4709. Federal insurance or guaranty The Bank may obtain from any department or agency of the United States of America any available insurance or guaranty for the payment or repayment of interest or principal, or both, or any part thereof, on any bonds or notes issued by the Bank, or on any municipal bonds or revenue bonds of governmental units purchased or held by the Bank, and notwithstanding any other provisions of this chapter may enter into any agreement or contract with respect to any insurance or guaranty except to the extent that it would in any way impair or interfere with the ability of the Bank to perform and fulfill the terms of any agreement made with the holders of the bonds or notes of the Bank. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 2, eff. Feb. 14, 1972; 1987, No. 55, § 32, eff. May 15, 1987.

24 V.S.A. § 4710 Surety for deposits by Bank

4710. Surety for deposits by Bank All banks, trust companies, savings banks, investment companies, and other persons carrying on a banking business are hereby authorized to give to the Bank a good and sufficient undertaking with such sureties as shall be approved by the Bank to the effect that the Bank or banking institution as hereinbefore described shall faithfully keep and pay over to the order of or upon the warrant of the Bank or its authorized agent all such funds as may be deposited with it by the Bank and agreed interest thereon under or by reason of this chapter, at such times or upon such demands as may be agreed with the Bank or in lieu of these sureties, deposit with the Bank or its authorized agent or any trustee therefor or for the holders of any bonds, as collateral, such securities as the Bank may approve. The deposits of the Bank may be evidenced by an agreement in such form and upon such terms and conditions as may be agreed upon by the Bank and the depository bank or banking institution. Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/24/119Fetched: 10/21/2026