Though Providence has been front of mind as the city perhaps most likely to file for Chapter 9 municipal bankruptcy protection, it appears Stockton, CA might threaten to beat the Rhode Island city to the punch. Though California voted in a new law last year to slow municipal bankruptcy filings amid growing reports of widespread financial problems within many local governments, Stockton officials have become the first to begin going through the new mandate’s mediation process. Reportedly, officials there and representatives are trying to set up meetings/negotiations with bondholders, creditors and employee unions to discuss options to help the debt-addled community.
Meanwhile, in Jefferson County, AL, creditors tied to its what is to date the largest Chapter 9 filing ever in the United States, a suffered a setback in derailing the proceedings. U.S. Bankruptcy Court Judge Thomas Bennett released a ruling allowing the county to continue operating under bankruptcy protection and the case to proceed despite objections from creditors over what state law actually allows. Jefferson County has been reeling financially from a botched sewer retrofit venture that has left the county with upwards of $4 billion in debt.
Brian Shappell, NACM staff writer