N.Y. Real Prop. Law § 121
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.
N.Y. Real Prop. Law § 121