Code of Massachusetts Regulations
801 CMR - EXECUTIVE OFFICE FOR ADMINISTRATION AND FINANCE
Title 801 CMR 56.00 - Nonprofit Community Hospitals And Nonprofit Community Health Centers Moral Obligation Bond Financing
Section 56.12 - Protocol in the Event of Borrower Default
Current through Register 1531, September 27, 2024
(1) Agency Action. When a borrower defaults on the payment of principal or interest on a moral obligation bond secured by a Community Hospital and Community Health Center Capital Reserve Fund, the Agency, upon written notification by the trustee for the bond holders, shall notify the A&F Secretary in writing of the borrower default and shall identify whether the default relates to the payment of principal or interest or both on such loan.
(2) A&F Secretary Action. Upon written notification of a borrower default under 801 CMR 56.12(1), the A&F Secretary, pursuant to St. 1968, c. 614, § 10, as amended by St. 2011, c. 9, § 21, shall direct the Comptroller to withhold any funds that are due and payable by the Commonwealth to the borrower until the amount of principal or interest or both due or anticipated to be due has been paid to the Agency or the trustee for the bondholders. Funds subject to be withheld pursuant to 801 CMR 56.12 shall include, but not be limited to, federal and state grants, to the extent permissible under the applicable federal grant authority, contracts, allocations and appropriations.
(3) The Agency shall provide, in writing, further notification to the A&F Secretary in the event of a borrower payment default that remains uncured by the borrower for a period of 30 days. Upon written notification, the A&F Secretary shall:
The Agency, pursuant to the St.1968, c. 614, § 10, as amended by St. 2011, c. 9, § 21, shall apply any such funds to the amounts due from the borrower. If the Comptroller fails to transfer sufficient funds to the Agency to pay amounts then due to the bondholders, the Agency shall direct the trustee to apply funds available in the Community Hospital and Community Health Center Capital Reserve Fund to the amount due to bondholders.
(4) When the A&F Secretary directs the Comptroller to release funds under 801 CMR 56.12(3), the A&F Secretary shall notify or cause to be notified any other agency, department or authority of state government that exercises regulatory, supervisory or statutory control over the operations of the borrower. Upon such notification, the agency, department or authority shall immediately undertake its own review to determine what action, if any, the agency, department or authority should take to assist in the payment by the borrower of the money due. Additionally, any agency, department or authority of state government exercising regulatory, supervisory or statutory control over the operations of the borrower should undertake a review to identify the steps the agency, department or authority, other than the Comptroller or the Agency, should take to assure the continued prudent operation of the borrower or provision of services to the persons served by the borrower.
