In light of the County's aggregate indebtedness, the Firm believes that these amounts are not material. This way all parties concerned will be on the same page with regards to what is happening to the investments. While bondholders have suffered minor losses or delayed payments in previous chapter 9 cases, if Stockton's case proceeds as planned, it would mark the first time that a municipality significantly impaired its obligations to bondholders. Those notes will come due next June. Members of the Tongva, Juaneño, and Luiseño Native American groups long inhabited the area. Further, you can have past due taxes, student loans and child support payments paid off within the plan as well.
In particular, the bankruptcy court determined that the Alabama statute authorizing chapter 9 filings only enabled permitted municipalities with bonded debt to file. At the court's encouragement, the parties negotiated new labor agreements. Specifically, the developer was aware that one class of the town's creditors would vote to confirm the plan, which would allow the debtor to cram down the plan over the developer's objection. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship. The construction and operation of the plant went over budget, and the original forecasts of the revenues that would be generated from the plant proved to be overly optimistic. The local economy was doing very well and in a matter of 18 months was able to haul itself out of bankruptcy.
Detroit's bankruptcy filing presents numerous complicated issues, which will be resolved over the course of the case. Consult with your attorney if your debt is unusually high. Generally, property acquired after the commencement of a case is not subject to any lien resulting from a pre-petition security agreement. Bildisco, which was decided prior to the enactment of section 1113, held that under section 365, a debtor could unilaterally reject or modify a collective bargaining agreement without complying with applicable state law. Merrill Lynch lawyers filed the most vigorous objection to the county's recovery plan, arguing that the document contains improper language stating that the county was insolvent at the time of its bankruptcy filing and had no other option but to seek Chapter 9 protection. Unlike most general purpose municipalities that file for bankruptcy, Vallejo's financial distress was not caused by excessive debt.
The district court therefore reversed the bankruptcy court's decision and remanded the case. Use, Sale or Lease of Property § 363 A chapter 9 debtor can use, sell or lease its property without bankruptcy court approval or oversight. County attorneys say Merrill's risky investments caused the losses, and the firm must accept blame for its actions. The monthly payments have become more than he can handle and the creditor phone calls are driving him crazy. Chapter 13 Reorganization If your disposable income is too high, or if you wish to continue operating your small business, or you face foreclosure of your home, then a Chapter 13 is an option. Importantly, the plan of adjustment must also be in the best interest of creditors. In addition, the county lowered the costs of its debt service by entering into swap agreements under which the county would swap long-term fixed higher interest rate debt into short-term variable rate debt.
A chapter 11 debtor cannot use, sell or lease property outside of the ordinary course without bankruptcy court approval. A chapter 9 debtor also must file a list of all of its creditors. Next, the advisory discusses significant chapter 9 cases since the Orange County bankruptcy case in 1994—the largest municipal bankruptcy at the time. Solution: Bob and Lucy contacted us about their mortgage crisis. In 2008, Jefferson County defaulted on its debt obligations, which resulted in the acceleration of the debt.
Citron had a fairly free hand in investment decisions with low priority on reporting. Ambac's municipal bond obligations remained in the general account and, therefore, were not affected by the rehabilitation proceeding. The Firm may also represent the County, an affiliated entity, in its related case under chapter 9. To pay for the property, they took out a first and a second mortgage and both loans were interest only. Result: By filing bankruptcy, Jenny was able to put an immediate stop to the lawsuit against her without any of her wages being garnished. Litigation and a buoyant economy helped right many of the wrongs. It compiles the chronological events which led to the bankruptcy of Orange County.
The investments had been made by a county desperate to get additional profits on its investments to pay for government services. Individuals not guaranteed assistance after 10:00 a. As part of the confirmed plan, the city closed fire stations, reduced public services, cut staffing requirements, laid off city workers, required new city workers to contribute more to their pensions and all employees to contribute more for their health insurance and sought new revenue. Our firm filed a Motion for Contempt and for Sanctions for Violations of the Automatic Stay within the core bankruptcy proceeding. His principal advisors for the kind of instruments he could invest in were Merrill Lynch. By making the minimum payments each month, you are ensuring that you repay the amount you borrowed many times over and digging yourself out of the financial hole becomes more and more difficult.
However, bankruptcy courts have found that municipal debtors have not acted in good faith where the debtors never exercised their assessment powers prior to initiating proceedings in bankruptcy court. In addition, the city experienced budgetary stress as 75 percent of Stockton's general fund was used for the public safety payroll and to service debt, and satisfying pension obligations accounted for nearly 13 percent of the city's overall spending. San Bernardino has indicated that it intends to resume making payments. Any claim listed on the list of creditors is a proof of claim deemed filed under § 501, unless filed as contingent, disputed or unliquidated. One of her credit card companies has now filed a lawsuit against her and she is worried a wage garnishment will push her over the edge.