On the heels on the fifth municipal bankruptcy filing this year in a small, yet press-hounded community in Rhode Island, lawmakers in an Alabama community have delayed a vote on a potential Chapter 9 filing there for the second consecutive week.
In Jefferson County, AL, it appears to be more a case of trying to work out a deal to stay out of bankruptcy rather than simply delaying the inevitable as county lawmakers moved a planned vote Thursday back eight days (to Aug. 12). A major creditor and Jefferson County are negotiating but remain far apart on terms thus far during negotiations – it’s been reported that the creditor is willing to shave as much as $1 billion off the county’s debt, but lawmakers want a larger break of $1.3 billion. Jefferson County’s main debt problems are related to the more than $3 billion in debts tied to a sewer rehab project there several years ago.
Alabama Gov. Robert Bentley noted earlier this summer that Chapter 9 was "a very strong possibility." It would be the largest municipal bankruptcy filing in U.S. history.
The delay in the vote regarding a Chapter 9 filing, which had been seen as an inevitability before creditors began negotiations, comes during the same week that Central Falls, RI opted to file. Facing pension obligations of about $80 million, an estimated $25 million deficit projection through 2016 and former employees or widows unwilling to voluntarily reduce their entitlements, it was seen as the only option to avoid financial doom for the cash-strapped community near Providence.
Brian Shappell, NACM staff writer