15 U.S.C. § 77ooo — Duties and responsibility of the trustee

Page 195 TITLE 15—COMMERCE AND TRADE § 77ooo is expressly provided therein that such provision is ex- cluded) to provide that’’ for ‘‘If the indenture to be qualified so provides,’’ and ‘‘duly authorized to make such certificate or opinion by the obligor from time to time’’ for ‘‘specified in the indenture’’ in penultimate sentence. Subsec. (d)(1) to (3). Pub. L. 101–550, § 413(12), which di- rected that ‘‘requiring the obligor upon the indenture securities to furnish to the indenture trustee a certifi- cate or opinion of an engineer, appraiser or other ex- pert as to the fair value’’ be struck out after the para- graph designations in pars. (1) to (3), was executed by striking out ‘‘requiring the obligor upon the indenture securities to furnish to the indenture trustee a certifi- cate or opinion of an engineer, appraiser, or other ex- pert as to the fair value’’, as the probable intent of Congress. Subsec. (e). Pub. L. 101–550, § 413(15), inserted ‘‘(other than certificates provided pursuant to subsection (a)(4) of this section)’’ after ‘‘indenture’’. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77ooo. Duties and responsibility of the trustee (a) Duties prior to default The indenture to be qualified shall automati- cally be deemed (unless it is expressly provided therein that any such provision is excluded) to provide that, prior to default (as such term is defined in such indenture)— (1) the indenture trustee shall not be liable except for the performance of such duties as are specifically set out in such indenture; and (2) the indenture trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, in the absence of bad faith on the part of such trustee, upon certificates or opinions con- forming to the requirements of the indenture; but the indenture trustee shall examine the evi- dence furnished to it pursuant to section 77nnn of this title to determine whether or not such evidence conforms to the requirements of the in- denture. (b) Notice of defaults The indenture trustee shall give to the inden- ture security holders, in the manner and to the extent provided in subsection (c) of section 77mmm of this title, notice of all defaults known to the trustee, within ninety days after the occurrence thereof: Provided, That such in- denture shall automatically be deemed (unless it is expressly provided therein that such provision is excluded) to provide that, except in the case of default in the payment of the principal of or interest on any indenture security, or in the payment of any sinking or purchase fund in- stallment, the trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or respon- sible officers, of the trustee in good faith deter- mine that the withholding of such notice is in the interests of the indenture security holders. (c) Duties of the trustee in case of default The indenture trustee shall exercise in case of default (as such term is defined in such inden- ture) such of the rights and powers vested in it by such indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the cir- cumstances in the conduct of his own affairs. (d) Responsibility of the trustee The indenture to be qualified shall not contain any provisions relieving the indenture trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that— (1) such indenture shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to contain the provisions authorized by paragraphs (1) and (2) of subsection (a) of this section; (2) such indenture shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to contain provisions protecting the indenture trustee from liability for any error of judgment made in good faith by a responsible officer or offi- cers of such trustee, unless it shall be proved that such trustee was negligent in ascertaining the pertinent facts; and (3) such indenture shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to contain provisions protecting the indenture trustee with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the indenture securities at the time outstanding (determined as provided in subsection (a) of section 77ppp of this title) relating to the time, method, and place of conducting any proceeding for any remedy available to such trustee, or exercising any trust or power conferred upon such trust- ee, under such indenture. (e) Undertaking for costs The indenture to be qualified shall automati- cally be deemed (unless it is expressly provided therein that any such provision is excluded) to contain provisions to the effect that all parties thereto, including the indenture security hold- ers, agree that the court may in its discretion require, in any suit for the enforcement of any right or remedy under such indenture, or in any suit against the trustee for any action taken or omitted by it as trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, includ- ing reasonable attorney’s fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant: Provided, That the provisions of this subsection shall not apply to any suit instituted by such trustee, to any suit instituted by any indenture security holder, or group of indenture security holders, holding in the aggregate more than 10 per centum in prin- cipal amount of the indenture securities out- standing, or to any suit instituted by any inden- ture security holder for the enforcement of the Page 196 TITLE 15—COMMERCE AND TRADE § 77ppp payment of the principal of or interest on any indenture security, on or after the respective due dates expressed in such indenture security. (May 27, 1933, ch. 38, title III, § 315, as added Aug. 3, 1939, ch. 411, 53 Stat. 1171; amended Pub. L. 101–550, title IV, § 414, Nov. 15, 1990, 104 Stat. 2730.) Editorial Notes AMENDMENTS 1990—Subsec. (a). Pub. L. 101–550, § 414(1), (2), sub- stituted ‘‘The indenture to be qualified shall automati- cally be deemed (unless it is expressly provided therein that any such provision is excluded) to’’ for ‘‘The in- denture to be qualified may’’ and ‘‘the indenture trust- ee shall examine’’ for ‘‘such indenture shall contain provisions requiring the indenture trustee to examine’’. Subsec. (b). Pub. L. 101–550, § 414(3), (4), substituted ‘‘The indenture trustee shall’’ for ‘‘The indenture to be qualified shall contain provisions requiring the inden- ture trustee to’’ and ‘‘That such indenture shall auto- matically be deemed (unless it is expressly provided therein that such provision is excluded) to’’ for ‘‘That such indenture may’’. Subsec. (c). Pub. L. 101–550, § 414(3), substituted ‘‘The indenture trustee shall’’ for ‘‘The indenture to be quali- fied shall contain provisions requiring the indenture trustee to’’. Subsec. (d)(1) to (3). Pub. L. 101–550, § 414(5), sub- stituted ‘‘such indenture shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to’’ for ‘‘such indenture may’’. Subsec. (e). Pub. L. 101–550, § 414(1), substituted ‘‘The indenture to be qualified shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to’’ for ‘‘The indenture to be qualified may’’. § 77ppp. Directions and waivers by bondholders; prohibition of impairment of holder’s right to payment; record date (a) Directions and waivers by bondholders The indenture to be qualified— (1) shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to contain provisions authorizing the holders of not less than a ma- jority in principal amount of the indenture se- curities or if expressly specified in such inden- ture, of any series of securities at the time outstanding (A) to direct the time, method, and place of conducting any proceeding for any remedy available to such trustee, or exer- cising any trust or power conferred upon such trustee, under such indenture, or (B) on behalf of the holders of all such indenture securities, to consent to the waiver of any past default and its consequences; or (2) may contain provisions authorizing the holders of not less than 75 per centum in prin- cipal amount of the indenture securities or if expressly specified in such indenture, of any series of securities at the time outstanding to consent on behalf of the holders of all such in- denture securities to the postponement of any interest payment for a period not exceeding three years from its due date. For the purposes of this subsection and para- graph (3) of subsection (d) of section 77ooo of this title, in determining whether the holders of the required principal amount of indenture securi- ties have concurred in any such direction or consent, indenture securities owned by any obli- gor upon the indenture securities, or by any per- son directly or indirectly controlling or con- trolled by or under direct or indirect common control with any such obligor, shall be dis- regarded, except that for the purposes of deter- mining whether the indenture trustee shall be protected in relying on any such direction or consent, only indenture securities which such trustee knows are so owned shall be so dis- regarded. (b) Prohibition of impairment of holder’s right to payment Notwithstanding any other provision of the in- denture to be qualified, the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security, on or after the respective due dates ex- pressed in such indenture security, or to insti- tute suit for the enforcement of any such pay- ment on or after such respective dates, shall not be impaired or affected without the consent of such holder, except— (1) as to a postponement of an interest pay- ment consented to as provided in paragraph (2) of subsection (a); (2) that such indenture may contain provi- sions limiting or denying the right of any such holder to institute any such suit, if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the sur- render, impairment, waiver, or loss of the lien of such indenture upon any property subject to such lien; and (3) that the right of any holder of any inden- ture security to receive payment of the prin- cipal of and interest on such indenture secu- rity shall not be deemed to be impaired or af- fected by any change occurring by the applica- tion of section 5803 of title 12 to any indenture security. (c) Record date The obligor upon any indenture qualified under this subchapter may set a record date for purposes of determining the identity of inden- ture security holders entitled to vote or consent to any action by vote or consent authorized or permitted by subsection (a) of this section. Un- less the indenture provides otherwise, such record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of holders furnished to the trustee pursuant to section 77lll of this title prior to such solicitation. (May 27, 1933, ch. 38, title III, § 316, as added Aug. 3, 1939, ch. 411, 53 Stat. 1172; amended Pub. L. 101–550, title IV, § 415, Nov. 15, 1990, 104 Stat. 2731; Pub. L. 117–103, div. U, § 108, Mar. 15, 2022, 136 Stat. 832.) Editorial Notes AMENDMENTS 2022—Subsec. (b). Pub. L. 117–103 substituted ‘‘such holder, except—’’ for ‘‘such holder, except’’, designated remainder of existing provisions as pars. (1) and (2), and added par. (3). 1990—Subsec. (a). Pub. L. 101–550, § 415(1)–(3), in intro- ductory provisions struck out ‘‘may contain provi-