Holders of Railroad Bonds And Notes Their Rights And Remedies Treating Particu
Holders of Railroad Bonds And Notes Their Rights And Remedies Treating Particu
Louis Heft
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Should there be no guarantee, the parent company is in no way liable on these bonds; should there be a guarantee the liability of the parent company is lim- ited to the terms of the guaranty. See Guaranteed bonds. Page 293. Divisional bonds, sometimes, are the direct obli- PRIORITIES OF THE OTHER CREDITORS 293 gations of the parent company but secured only by a mortgage on a division. As to the other parts or divisions of the system which the mortgage does not cover, the holders of these divisi...onal bonds have no recourse until all the mortgages and other liens thereon have been satisfied in full. The name "divisional bonds" is also sometimes given to the issue of a railroad that has subsequently consolidated. It is really the bond of one of the constituent companies that formerly operated a road that is now a branch or a division of the parent or main company, such issue having been secured by a mortgage on such branch or division executed by the constituent company before consolidation.
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