A seal of the city of Stockton, Calf. (Photo: Astudio, via Shutterstock)On the day that Stockton emerged from bankruptcy last week, ending 32 months of debt protection, the final court argument was about the “cram down” imposed on the only creditor that did not cut a deal.
The CalPERS' governing board during a meeting several years ago at the pension fund's headquarters. (Photo: CalPERS board)Calpensions: A federal judge ruled that CalPERS pensions can be cut in bankruptcy like other debt. He rejected the argument that the giant system is an “arm of the state” with pensions protected by federal law and two state laws on contracts and liens.
Waterfront, Stockton, Calif., at Weber Point. (Photo: Terrance Emerson)Calpensions: During a hearing Oct. 1 on Stockton’s “plan of adjustment” to cut debt and emerge from bankruptcy, there may be a landmark ruling on whether CalPERS pension debt can be cut in bankruptcy.
Bus stop in Stockton, Delta College. (Photo: San Joaquin RTD)Calpensions: Stockton filed a revised debt-cutting plan last week that could lead to a deal with a holdout creditor, Franklin bonds, possibly enabling the city to emerge from bankruptcy without cutting pensions. But however that plays out, a federal judge may rule on whether public pensions issued through the California Public Employees Retirement System can be cut in bankruptcy like other debts.
U.S. Bankruptcy Judge Christopher Klein, ruling disclosure was adequate, gave Stockton permission to circulate the debt-cutting “plan of adjustment” to all creditors for a vote on Feb. 10. An objection from one creditor can force a trial.