N.Y. Real Prop. Acts. Law § 123

§ 123. Preserving existing rights. Nothing in this act shall be deemed\nto prevent any bondholder or committee of bondholders from bidding at\nthe foreclosure sale and in case he or they should be a successful\nbidder, from applying upon the purchase price the bonds held by him or\nthem at the amount distributable thereon and reorganizing the property\nso purchased in any manner which was lawful prior to the enactment of\nthis act, nor to impair any previously existing right of a trustee so to\npurchase and pay for the property, or to preclude any trustee which\nshall have purchased such property from submitting to the court a plan\nfor its reorganization. The court may provide for the qualification of\nbidders other than the trustee by requiring them to deposit with the\nofficer conducting the sale in advance of bidding up to ten per centum\nof the amount of their bid in cash or in bonds taken at the principal\namount thereof. In any action now or hereafter pending for the\nforeclosure of any such mortgage or indenture, the property shall, on\napplication of the trustee, be sold subject to the lien of any taxes,\nassessments and water rates, any prior lien, or to any liens which may\nthereafter be established, which are the subject of litigation pending\nat the time of the sale, provided a brief statement thereof is contained\nin the notice of sale.\n