Stockton eligible for bankruptcy protection: judge

[Eugene]

Last edited Mon Apr 1, 2013, 03:56 PM - Edit history (1)

Source: Reuters

Stockton eligible for bankruptcy protection: judge

By Jonathan Weber
SACRAMENTO, California | Mon Apr 1, 2013 3:48pm EDT

(Reuters) - The city of Stockton, California, is eligible for bankruptcy protection, a federal judge ruled on Monday, turning aside creditors' arguments that the city was not truly insolvent when it sought protection and had improperly failed to seek concessions.

U.S. Bankruptcy Court Judge Christopher Klein's ruling permits Stockton to proceed with its Chapter 9 bankruptcy protection filing from last June in a case with precedent-setting potential for other cash-strapped U.S. cities.

In a lengthy preamble to his ruling, Klein said Stockton's bondholders had failed to negotiate in good faith with the city prior to its filing for protection. He added the city was "by any measure insolvent" prior to its filing.

Stockton is the largest U.S. city to have ever filed for bankruptcy. Its case is being closely watched in the $3.7 trillion municipal bond market as it is likely to have key implications for other struggling municipal and county governments, their employees and their bondholders.

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Read more: http://www.reuters.com/article/2013/04/01/us-stockton-bankruptcy-idUSBRE9300GP20130401

Previous Reuters Headline: Stockton bondholders did not bargain in "good faith": judge

[tularetom]

1. The bondholders wanted the city to weasel out of its pension obligations to retirees

Hopefully the court will turn them down.

[KoKo]

2. k&R!

[xchrom]

3. Du rec. Nt

[HiPointDem]

4. this is worth watching.