City of Chanute v. Polson

Pierron, J.:

This is an appeal by coupon bondholders of industrial revenue bonds issued by the City of Chanute. The project defaulted and the proceeds from the property which secured the bonds are not sufficient to pay off all the bonds. The City and the fiscal agent, Bank of Commerce, filed a declaratory judgment action asking the court for guidance in distributing the proceeds among the bondholders. The district court ruled that proceeds should be distributed pro rata among coupon bondholders and registered bondholders. The coupon bondholders denoted as “first lien” have appealed that…