47 U.S.C. § 1104 : US Code - Section 1104: Administration of loan guarantees

Search 47 U.S.C. § 1104 : US Code - Section 1104: Administration of loan guarantees

(a) In general
The Administrator of the Rural Utilities Service (in this chapter
referred to as the "Administrator") shall issue and otherwise
administer loan guarantees that have been approved by the Board in
accordance with sections 1102 and 1103 of this title.
(b) Security for protection of United States financial interests
(1) Terms and conditions
An applicant shall agree to such terms and conditions as are
satisfactory, in the judgment of the Board, to ensure that, as
long as any principal or interest is due and payable on a loan
guaranteed under this chapter, the applicant -
(A) shall maintain assets, equipment, facilities, and
operations on a continuing basis;
(B) shall not make any discretionary dividend payments that
impair its ability to repay obligations guaranteed under this
chapter;
(C) shall remain sufficiently capitalized; and
(D) shall submit to, and cooperate fully with, any audit of
the applicant under section 1105(a)(2) of this title.
(2) Collateral
(A) Existence of adequate collateral
An applicant shall provide the Board such documentation as is
necessary, in the judgment of the Board, to provide
satisfactory evidence that appropriate and adequate collateral
secures a loan guaranteed under this chapter.
(B) Form of collateral
Collateral required by subparagraph (A) shall consist solely
of assets of the applicant, any affiliate of the applicant, or
both (whichever the Board considers appropriate), including
primary assets to be used in the delivery of signals for which
the loan is guaranteed.
(C) Review of valuation
The value of collateral securing a loan guaranteed under this
chapter may be reviewed by the Board, and may be adjusted
downward by the Board if the Board reasonably believes such
adjustment is appropriate.
(3) Lien on interests in assets
Upon the Board's approval of a loan guarantee under this
chapter, the Administrator shall have liens on assets securing
the loan, which shall be superior to all other liens on such
assets, and the value of the assets (based on a determination
satisfactory to the Board) subject to the liens shall be at least
equal to the unpaid balance of the loan amount covered by the
loan guarantee, or that value approved by the Board under section
1103(d)(3)(B)(iii) of this title.
(4) Perfected security interest
With respect to a loan guaranteed under this chapter, the
Administrator and the lender shall have a perfected security
interest in assets securing the loan that are fully sufficient to
protect the financial interests of the United States and the
lender.
(5) Insurance
In accordance with practices in the private capital market, as
determined by the Board, the applicant for a loan guarantee under
this chapter shall obtain, at its expense, insurance sufficient
to protect the financial interests of the United States, as
determined by the Board.
(c) Assignment of loan guarantees
The holder of a loan guarantee under this chapter may assign the
loan guaranteed under this chapter in whole or in part, subject to
such requirements as the Board may prescribe.
(d) Expiration of loan guarantee upon stripping
Notwithstanding subsections (c), (e), and (h) of this section, a
loan guarantee under this chapter shall have no force or effect if
any part of the guaranteed portion of the loan is transferred
separate and apart from the unguaranteed portion of the loan.
(e) Adjustment
The Board may approve the adjustment of any term or condition of
a loan guarantee or a loan guaranteed under this chapter, including
the rate of interest, time of payment of principal or interest, or
security requirements only if -
(1) the adjustment is consistent with the financial interests
of the United States;
(2) consent has been obtained from the parties to the loan
agreement;
(3) the adjustment is consistent with the underwriting criteria
developed under section 1103(g) of this title;
(4) the adjustment does not adversely affect the interest of
the Federal Government in the assets or collateral of the
applicant;
(5) the adjustment does not adversely affect the ability of the
applicant to repay the loan; and
(6) the National Telecommunications and Information
Administration has been consulted by the Board regarding the
adjustment.
(f) Performance schedules
(1) Performance schedules
An applicant for a loan guarantee under this chapter for a
project covered by section 1103(e)(1) (!1) of this title shall
enter into stipulated performance schedules with the
Administrator with respect to the signals to be provided through
the project.
(2) Penalty
The Administrator may assess against and collect from an
applicant described in paragraph (1) a penalty not to exceed 3
times the interest due on the guaranteed loan of the applicant
under this chapter if the applicant fails to meet its stipulated
performance schedule under that paragraph.
(g) Compliance
The Administrator, in cooperation with the Board and as the
regulations of the Board may provide, shall enforce compliance by
an applicant, and any other party to a loan guarantee for whose
benefit assistance under this chapter is intended, with the
provisions of this chapter, any regulations under this chapter, and
the terms and conditions of the loan guarantee, including through
the submittal of such reports and documents as the Board may
require in regulations prescribed by the Board and through regular
periodic inspections and audits.
(h) Commercial validity
A loan guarantee under this chapter shall be incontestable -
(1) in the hands of an applicant on whose behalf the loan
guarantee is made, unless the applicant engaged in fraud or
misrepresentation in securing the loan guarantee; and
(2) as to any person or entity (or their respective successor
in interest) who makes or contracts to make a loan to the
applicant for the loan guarantee in reliance thereon, unless such
person or entity (or respective successor in interest) engaged in
fraud or misrepresentation in making or contracting to make such
loan.
(i) Defaults
The Board shall prescribe regulations governing defaults on loans
guaranteed under this chapter, including the administration of the
payment of guaranteed amounts upon default.
(j) Recovery of payments
(1) In general
The Administrator shall be entitled to recover from an
applicant for a loan guarantee under this chapter the amount of
any payment made to the holder of the guarantee with respect to
the loan.
(2) Subrogation
Upon making a payment described in paragraph (1), the
Administrator shall be subrogated to all rights of the party to
whom the payment is made with respect to the guarantee which was
the basis for the payment.
(3) Disposition of property
(A) Sale or disposal
The Administrator shall, in an orderly and efficient manner,
sell or otherwise dispose of any property or other interests
obtained under this chapter in a manner that maximizes taxpayer
return and is consistent with the financial interests of the
United States.
(B) Maintenance
The Administrator shall maintain in a cost-effective and
reasonable manner any property or other interests pending sale
or disposal of such property or other interests under
subparagraph (A).
(k) Action against obligor
(1) Authority to bring civil action
The Administrator may bring a civil action in an appropriate
district court of the United States in the name of the United
States or of the holder of the obligation in the event of a
default on a loan guaranteed under this chapter. The holder of a
loan guarantee shall make available to the Administrator all
records and evidence necessary to prosecute the civil action.
(2) Fully satisfying obligations owed the United States
The Administrator may accept property in satisfaction of any
sums owed the United States as a result of a default on a loan
guaranteed under this chapter, but only to the extent that any
cash accepted by the Administrator is not sufficient to satisfy
fully the sums owed as a result of the default.
(l) Breach of conditions
The Administrator shall commence a civil action in a court of
appropriate jurisdiction to enjoin any activity which the Board
finds is in violation of this chapter, the regulations under this
chapter, or any conditions which were duly agreed to, and to secure
any other appropriate relief, including relief against any
affiliate of the applicant.
(m) Attachment
No attachment or execution may be issued against the
Administrator or any property in the control of the Administrator
pursuant to this chapter before the entry of a final judgment (as
to which all rights of appeal have expired) by a Federal, State, or
other court of competent jurisdiction against the Administrator in
a proceeding for such action.
(n) Fees
(1) Application fee
The Board shall charge and collect from an applicant for a loan
guarantee under this chapter a fee to cover the cost of the Board
in making necessary determinations and findings with respect to
the loan guarantee application under this chapter. The amount of
the fee shall be reasonable.
(2) Loan guarantee origination fee
The Board shall charge, and the Administrator may collect, a
loan guarantee origination fee with respect to the issuance of a
loan guarantee under this chapter.
(3) Use of fees collected
(A) In general
Any fee collected under this subsection shall be used,
subject to subparagraph (B), to offset administrative costs
under this chapter, including costs of the Board and of the
Administrator.
(B) Subject to appropriations
The authority provided by this subsection shall be effective
only to such extent or in such amounts as are provided in
advance in appropriations Acts.
(C) Limitation on fees
The aggregate amount of fees imposed by this subsection shall
not exceed the actual amount of administrative costs under this
chapter.
(o) Requirements relating to affiliates
(1) Indemnification
The United States shall be indemnified by any affiliate
(acceptable to the Board) of an applicant for a loan guarantee
under this chapter for any losses that the United States incurs
as a result of -
(A) a judgment against the applicant or any of its
affiliates;
(B) any breach by the applicant or any of its affiliates of
their obligations under the loan guarantee agreement;
(C) any violation of the provisions of this chapter, and the
regulations prescribed under this chapter, by the applicant or
any of its affiliates;
(D) any penalties incurred by the applicant or any of its
affiliates for any reason, including violation of a stipulated
performance schedule under subsection (f) of this section; and
(E) any other circumstances that the Board considers
appropriate.
(2) Limitation on transfer of loan proceeds
An applicant for a loan guarantee under this chapter may not
transfer any part of the proceeds of the loan to an affiliate.
(p) Effect of bankruptcy
(1) Notwithstanding any other provision of law, whenever any
person or entity is indebted to the United States as a result of
any loan guarantee issued under this chapter and such person or
entity is insolvent or is a debtor in a case under title 11, the
debts due to the United States shall be satisfied first.
(2) A discharge in bankruptcy under title 11 shall not release a
person or entity from an obligation to the United States in
connection with a loan guarantee under this chapter.