§ 121. Reorganization of property covered by trust mortgage. Such
banking corporation, under the direction of the court in the foreclosure
action may, and if directed by the court shall, purchase or cause to be
purchased said real property, pursuant to a reorganization plan, and
cause to be formed a domestic business corporation, or a foreign
corporation providing such foreign corporation is authorized to do
business within this state, or utilize any other such corporation,
providing the corporation so formed or utilized shall have provided in
its certificate of incorporation the restriction set forth in section
one hundred eleven of decedent estate law, and shall thereupon grant and
release said property to such new corporation and its assigns forever,
or by assignment of its bid to such new corporation, or otherwise, cause
the referee's deed in foreclosure to be executed and delivered directly
to such new corporation granting and releasing such property to it and
its assigns forever, in exchange for the stocks, bonds and other
securities of such new corporation except such of said securities as may
be reserved for the adjustment of liens and claims against said
property, or for other purposes as specified in the plan, including any
provision made in a plan approved by the court and thereafter becoming
effective as provided in section one hundred twenty-two for any
interest, junior or subordinate to the mortgage foreclosed; provided,
however, that such new corporation shall be authorized to raise money by
mortgage, pledge, borrowing, sale of securities or otherwise to the
extent which may be set forth in the plan of reorganization. The
trustee, upon receiving such securities and any cash available from the
new corporation, shall distribute the same and any other funds or
property constituting part of the trust estate, ratably amongst those
parties interested in such mortgage, deed of trust or indenture less
such trustee's proper expenses and charges in connection therewith; and
thereupon the trustee upon the filing and approval of its accounts in
the foreclosure action and upon assigning to such new corporation any
deficiency judgment and any guarantees and insurance policies held by
the trustee and any claim for waste or otherwise in connection with the
mortgage estate, shall be discharged of any further obligation or
liability under such mortgage or indenture or otherwise. Nothing herein
contained shall affect or impair the liability of any guarantor or any
right or remedy existing in favor of any holders of bonds, notes,
certificates or other securities which are secured by or participate in
such mortgages, deeds of trust or indentures.