Posts Tagged: stockton
On the outskirts of San Bernardino. (Photo: Steve Heap)
A San Bernardino plan to exit bankruptcy follows the path of the Vallejo and Stockton exit plans, cutting bond debt and retiree health care but not pensions. Then it veers off in a new direction: contracting for fire, waste management and other services. The contract services are expected to reduce city pension costs. Other pension savings come from a sharp increase in employee payments toward pensions and from a payment of only 1 percent on a $50 million bond issued in 2005 to cover pensions costs.
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.
Calpensions: A federal judge, who earlier ruled CalPERS pension contracts can be overturned in bankruptcy, yesterday outlined the difficulty of cutting pensions while approving Stockton’s plan to exit bankruptcy with pensions intact.
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.
OPINION: The six-states plan would newly create two of the poorest states in the country, “Jefferson” at our state’s northern border and “Central California” encompassing a huge swath of out Central Valley including the cities of Stockton, Fresno, and Bakersfield. In both states, one of every five people would be living below the poverty line.
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.
Moves may allow bankrupt city to avoid pension fight
Bond insurers who walked away from mediation last year before Stockton filed for bankruptcy are at the table this summer. A deal could avoid a precedent-setting legal showdown on whether public pensions can be cut in bankruptcy.
Attorneys for the city and bond insurers told U.S. Bankruptcy Judge Christopher Klein last week that mediation, presided