Article 4. Action To Secure Payment Of Revenue Bonds of California Water Code >> Division 13. >> Part 6. >> Chapter 4. >> Article 4.

Bondholders owning or holding 25 percent or more of any outstanding and unpaid issue of revenue bonds may, when payments of principal or interest, or both, have been in default for not less than one year, institute proceedings in the superior court of the principal county to compel the district to fix and collect sufficient charges for the sale of water for the irrigation of land to pay when due the principal and interest of revenue bonds.

The complaint shall:
  (a) Name the district as a defendant.
  (b) State that on the date therein named bond principal payments, interest thereon, or both, were in default for a period of more than one year.
  (c) Pray:
  (1) That the district be adjudged in default of payments of its obligations as they mature.
  (2) That a receiver be appointed by the court to manage and conduct the affairs of the district, fix and collect charges for the sale of water for the irrigation of the land sufficient to pay all accumulated and unpaid revenue bond principal and interest charges.
  (3) That the receiver be vested with such other duties as the court may determine to be for the best interests of the district and the owners and holders of its outstanding and unpaid revenue bonds.

The summons in the proceeding shall be served by publishing a copy thereof once a week for four weeks in a newspaper of general circulation published in each affected county.

Within 30 days after publication of the summons has been completed and proof filed with the court any person may appear and answer the complaint.

On the expiration of 60 days after the publication of summons has been completed and proof filed with the court, after proof to the court that a default exists and continues, the court shall assume jurisdiction over the affairs of the district and appoint a receiver for the purposes set forth in the complaint.

The jurisdiction of the court over the affairs of the district shall continue until the default for which the receiver was appointed has been discharged.

A receiver has no power to dispose of any part of the property of the district except in the ordinary course of business. The authority of a receiver is limited to the operation and maintenance of the district.

No court has jurisdiction to enter any order or decree requiring or permitting a receiver to sell, assign, mortgage, or otherwise dispose of or encumber the district or any part thereof.

Whenever all that is due upon all obligations and interest thereon which are a charge, lien, or encumbrance on the revenues of the district has been paid and all defaults have been cured and made good, the court, after such notice and hearing as it deems reasonable and proper, shall direct the receiver to surrender jurisdiction over the affairs of the district.