A bit of compromise can apparently go a long way in Chapter 9 bankruptcy proceedings. After California’s mandated negotiations period designed to force creditors and municipalities to work things out previously yielded little in results, one city’s Chapter 9 proceedings just got quite a bit easier.
Mammoth Lakes, CA officials confirmed that it has reached a tentative agreement on a settlement of the $43 million court judgment that was won in court by a land developer, a court ruling that almost single-handedly forced the community into insolvency, unlike other U.S. cities that are dealing with problems like pension and health care costs.
“The settlement agreement, including any and all terms, will remain confidential until it is fully documented and executed,” said a release on the Mammoth Lakes, CA web site. “While steps are taken to document and seek approval of the settlement, all discovery and litigation among the parties will be put on hold… the town will provide additional information to the public as soon as the settlement documentation is finalized and filed for court approval, which is expected within weeks.”
The release did not outline the extent to which the municipal bankruptcy case will be affected. Mammoth Lakes filed for Chapter 9 protection just before the Independence Day holiday.
It’s the second time in as many years that parties negotiated a settlement after a Chapter 9 filing was made. Concessions with creditors in an out-of-court settlement between Central Falls, RI and its retired workers following that municipality's 2011 Chapter 9 filing, one of the first and most publicized of the 2011/2012 wave of cases. The filing essentially forced the negotiations.
-Brian Shappell, CBA, NACM staff writer