Preferential Collection of Claims Against Corporation. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Corporation within four months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Debentures, the Holders of Coupons and the holders of other indenture securities (as defined in Subsection (c) of this Section); (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four month period and valid as against the Corporation and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Corporation upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Corporation and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee (A) to retain for its own account (i) payments made on account of any such claim by any person (other than the Corporation) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distribution made in cash, securities or other property in respect of claims filed against the Corporation in bankruptcy or receivership or in proceedings for reorganization pursuant to Title II of the United States Code, as now constituted or as hereafter amended, or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within four months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to create a special account pursuant to this Section, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Holders of the Debentures, the Holders of the Coupons and the holders of other indenture securities in such manner that the Trustee, such Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Corporation in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Corporation of the funds and property in such special account and before crediting to the respective claims of the Trustee and such Holders and the holders of other indenture securities dividends on claims filed against the Corporation in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee and such Holders and the holders of other indenture securities, in accordance with the provision of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and such Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such four month period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four month period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such four month period; and (ii) such receipt of property or reduction of claim occurred within four months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection (c) of this Section: (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Corporation; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection (c)of this Section. (c) For the purposes of this Section only:
Appears in 1 contract
Sources: Indenture (Alliedsignal Inc)
Preferential Collection of Claims Against Corporation. (a) Subject to Subsection the provisions of subsection (b) of this SectionSection 7.13, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Corporation or any other obligor on the Subordinated Securities within four three months prior to a default, as defined in Subsection subsection (c) of this SectionSection 7.13, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the DebenturesSubordinated Securities for which it is acting as Trustee, the Holders of Coupons and the holders of other indenture securities (as defined in Subsection subsection (c) of this Section);Section 7.13):
(1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four month period three months' period, and valid as against the Corporation or such other obligor on the Subordinated Securities and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsectionsubsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Corporation or such other obligor on the Subordinated Securities upon the date of such default; and
(2) all property received by the Trustee in respect of any claim claims as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four month three months' period, or an amount equal to the proceeds of any such property, property if disposed of, subject, however, to the rights, if any, of the Corporation or such other obligor on the Subordinated Securities and its their respective other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any such claim by any person Person (other than the CorporationCorporation or such other obligor on the Subordinated Securities) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third personPerson, and (iii) distribution distributions made in cash, securities or other property in respect of claims filed against the Corporation or such other obligor on the Subordinated Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title II 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State lawlaws;
(B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four month three months' period;
(C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four month three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received received, the Trustee had no reasonable cause to believe that a default default, as defined in Subsection subsection (c) of this Section 7.13, would occur within four three months; or
(D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four month three months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, and to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing preexisting claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing preexisting claim. If the Trustee shall be required to create a special account pursuant to this Sectionaccount, the funds and property held in such special account and the proceeds thereof shall be apportioned between among the Trustee, the Holders of the DebenturesSubordinated Securities for which it is acting as Trustee, the Holders of the Coupons and the holders of other indenture securities in such manner that the Trustee, such Holders Subordinated Securityholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Corporation or such other obligor on the Subordinated Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Corporation or such other obligor on the Subordinated Securities of the funds and property in such special account and before crediting to the respective claims of the Trustee and Trustee, such Holders Subordinated Securityholders, and the holders of other indenture securities dividends on claims filed against the Corporation or such other obligor on the Subordinated Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, claim in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, whether such distribution is made in cash, securities, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings proceeding for reorganization is pending shall have jurisdiction (i) to apportion between among the Trustee and Trustee, such Holders Subordinated Securityholders, and the holders of other indenture securities, in accordance with the provision provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, apportionment in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and Trustee, such Holders Subordinated Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claimsclaim, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which who has resigned or been removed after the beginning of such four month three months' period shall be subject to the provisions of this Subsection subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four month three months' period, it shall be subject to the provisions of this Subsection subsection (a) if and only if the following conditions exist:
(i) the receipt of property or reduction of claim, claim which would have given rise to the obligation to account, if such Trustee had continued continued, as Trusteetrustee, occurred after the beginning of such four month three months' period; and
(ii) such receipt of property or reduction of claim occurred within four three months after such resignation or removal. In every case commenced under the Bankruptcy Act of 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months shall be deemed to be references to periods of four months.
(b) There shall be excluded from the operation of Subsection subsection (a) of this Section 7.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Subordinated Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Subordinated Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances advance and of the circumstances surrounding the making thereof is given to the Holders Subordinated Securityholders at the time and in the manner provided in this IndentureSection 5.4(c) with respect to reports pursuant to subsections (a) and (b) thereof, respectively;
(3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or premises rented; , or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection subsection (c) of this Section:Section 7.13;
(5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the CorporationCorporation or any other obligor on the Subordinated Securities; orand
(6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection subsection (c)of c) of this SectionSection 7.13.
(c) For the purposes of As used in this Section only7.13 the following terms shall be accorded the following definitions:
Appears in 1 contract
Preferential Collection of Claims Against Corporation. (a) Subject to Subsection the provisions of subsection (b) of this SectionSection 7.13, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Corporation or any other obligor on the Securities within four three months prior to a default, as defined in Subsection subsection (c) of this SectionSection 7.13, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the DebenturesSecurities for which it is acting as Trustee, the Holders of Coupons and the holders of other indenture securities (as defined in Subsection subsection (c) of this Section);Section 7.13):
(1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four month period three months' period, and valid as against the Corporation or such other obligor on the Securities and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsectionsubsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Corporation or such other obligor on the Securities upon the date of such default; and
(2) all property received by the Trustee in respect of any claim claims as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four month three months' period, or an amount equal to the proceeds of any such property, property if disposed of, subject, however, to the rights, if any, of the Corporation or such other obligor on the Securities and its their respective other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any such claim by any person Person (other than the CorporationCorporation or such other obligor on the Securities) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third personPerson, and (iii) distribution distributions made in cash, securities or other property in respect of claims filed against the Corporation or such other obligor on the Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title II 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State lawlaws;
(B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four month three months' period;
(C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four month three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received received, the Trustee had no reasonable cause to believe that a default default, as defined in Subsection subsection (c) of this Section 7.13, would occur within four three months; or
(D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four month three months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, and to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing preexisting claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing preexisting claim. If the Trustee shall be required to create a special account pursuant to this Sectionaccount, the funds and property held in such special account and the proceeds thereof shall be apportioned between among the Trustee, the Holders of the DebenturesSecurities for which it is acting as Trustee, the Holders of the Coupons and the holders of other indenture securities in such manner that the Trustee, such Holders Securityholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Corporation or such other obligor on the Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Corporation or such other obligor on the Securities of the funds and property in such special account and before crediting to the respective claims of the Trustee and Trustee, such Holders Securityholders, and the holders of other indenture securities dividends on claims filed against the Corporation or such other obligor on the Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, claim in bankruptcy or receivership or in proceedings for reorganization pursuant to Title 11 of the United States Code, as now constituted or as hereafter amended, Code or applicable State law, whether such distribution is made in cash, securities, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings proceeding for reorganization is pending shall have jurisdiction (i) to apportion between among the Trustee and Trustee, such Holders Securityholders, and the holders of other indenture securities, in accordance with the provision provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, apportionment in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and Trustee, such Holders Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claimsclaim, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which who has resigned or been removed after the beginning of such four month three months' period shall be subject to the provisions of this Subsection subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four month three months' period, it shall be subject to the provisions of this Subsection subsection (a) if and only if the following conditions exist:
(i) the receipt of property or reduction of claim, claim which would have given rise to the obligation to account, if such Trustee had continued continued, as Trusteetrustee, occurred after the beginning of such four month three months' period; and
(ii) such receipt of property or reduction of claim occurred within four three months after such resignation or removal. In every case commenced under the Bankruptcy Act of 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months shall be deemed to be references to periods of four months.
(b) There shall be excluded from the operation of Subsection subsection (a) of this Section 7.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances advance and of the circumstances surrounding the making thereof is given to the Holders Securityholders at the time and in the manner provided in this IndentureSection 5.4(c) with respect to reports pursuant to subsections (a) and (b) thereof, respectively;
(3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or premises rented; , or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection subsection (c) of this Section:Section 7.13;
(5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the CorporationCorporation or any other obligor on the Securities; orand
(6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection subsection (c)of c) of this SectionSection 7.13.
(c) For the purposes of As used in this Section only7.13 the following terms shall be accorded the following definitions:
Appears in 1 contract
Sources: Indenture (Providian Financing Iv)