I think this is an excellent report, but I imagine it was intended for members of the California legislature as much as city officials coping with distressed finances. There are swarms of bankruptcy attorneys circling weak municipalities, willing and able to establish an hourly relationship and give advice. But California legislators have a lot of constituencies to placate, and every muni bankruptcy affects public unions and their retirees. Public unions have long been a powerful force in Sacramento. Bloomberg reported that public unions contributed $76 million to California politicians and ballot measures in 2010, the single largest interest group that year.
Source: reuters.com
Video: Why municipalities are not filing for Chapter 9
Stockton and Mammoth Lakes Chapter 9 Municipal Bankruptcy Filings
The city of Stockton has been in a decline for the past several years. In its court documents, the City of Stockton has indicated they depleted their reserves and tried everything in their power to avoid filing for bankruptcy. Stockton faces a growing deficit for the 2012 – 2013 fiscal year. After reviewing the list of the city’s 20 largest unsecured creditors, it becomes very obvious that the biggest contributor to the city’s decline is the massive pension costs. Their largest creditor is the California Public Employees Retirement System (CalPERS). CalPERS provides retirement benefits to public employees. CalPERS is owed $147.5 million. Wells Fargo comes in a close second with a claim of $124.3 million. The debt owed to Wells Fargo is for pension obligation bonds which were used to fund the public pension plans.
Source: fremont-bankruptcy-attorney.com
Goodwin Procter Launches MuniBK Municipal Bankruptcy Blog
“As the major ratings agencies have recently reported, at least 55 and perhaps as many as 100 California cities have declared fiscal crises. Yet, California remains the nation’s largest issuer of municipal debt, accounting for almost 20 percent of the nation’s municipal bond volume,” added Lewis Feldman, partner and chair of Goodwin’s Public Finance Practice and Los Angeles office. “The MuniBK blog will cover the intersecting issues of public finance, restructurings and Chapter 9 to aggregate information and developments from here in California and around the country, and share Goodwin’s analysis of legal and business developments as they occur.”
Source: blogpong.com
Part Seven : Banking and Finance Law Report
Chapter 7, so named because it’s the 700 series of the Bankruptcy Code, is liquidation. Individuals and companies can file for Chapter 7 bankruptcy. For an individual, most assets will be sold or returned to the creditor. An asset might be returned to the creditor that has the first lien on it if there is no equity in the asset, for example if real estate is worth $500,000 but the mortgage on it is $750,000. In contrast, a debtor may chose to affirm certain debts if they want to retain the corresponding asset. For a business, Chapter 7 liquidation means the business is closed or will be closed, and will be sold off in whole or in parts. A trustee is appointed by the court to oversee the sale of the debtor’s assets (note that the debtor is not in charge, as in an 11); it’s also possible that the effect of a Chapter 7 for an individual (not a business) is a discharge from their debts. If an unsecured creditor receives a 10% distribution through a Chapter 7, the remaining 90% is discharged, meaning that the creditor cannot come back after bankruptcy and try to collect the 90% balance from the debtor. That creditor may face a contempt of court charge. There are specific sections in Chapter 7 for stockbroker, commodity broker and clearing bank liquidations.
Source: bankingandfinancelawreport.com
The Coming Crisis: Bankrupt Cities, Municipalities List and Map
Many local governments across the U.S. face steep budget deficits as they struggle to pay off debts accumulated over years. As a last resort, some have filed for bankruptcy. Governing is tracking the issue, and will update this page as more municipalities seek bankruptcy protection. The majority of Chapter 9 bankruptcy filings have been submitted by utility authorities, special districts and other taxing entities. In Omaha, Neb., nine Sanitary and Improvement Districts have filed for bankruptcy since 2010. It’s also important to note that only about half of states allow municipalities to file for Chapter 9 bankruptcy, while laws prohibit filings in other states. List of Bankruptcy Filings Since 2010 All Municipal Bankruptcy Filings: 28 City and Locality Bankruptcy Filings: 7 Municipal Bankruptcies Map The map below shows all municipalities filing for Chapter 9 bankruptcy protection since 2010, along with local governments voting to approve a bankruptcy filing.
Source: blogspot.com
YORK’S POLICE UNION BULLETIN: FINAL EXAM
Today, I will be administering the final examination for Municipal Bankruptcy 101. There are ten questions. None of them are trick questions or a play on words. The correct answers are simple and straightforward and only require one word – Yes or No.. Remember, the correct answers are based on the facts as they are today, not what they should be. Next week, I will provide the correct answer for all ten questions, along with the explanations for the answers.
Source: blogspot.com
Should bankrupt California cities disincorporate?
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Source: capoliticalnews.com