Tuesday, June 26, 2012

Stockton California Within Hours of Becoming Largest Ch. 9 Bankruptcy

For pre-1934 insolvencies creditors went straight to a writ of mandamus.
From Reuters:
California's Stockton seen at brink of bankruptcy filing
Stockton, a northern California city of nearly 300,000, is poised on Tuesday to become the largest U.S. city to declare bankruptcy by approving a budget that requests protection from creditors.

After three months of talks to avert the bankruptcy concluded at midnight on Monday without results, Stockton's city council is scheduled to meet on Tuesday evening to vote on the new budget. The city manager could file for Chapter 9 as soon as Wednesday.

The council, due to meet at 6:30 p.m. local time, is widely expected to endorse the plan, said Dwane Milnes, who represented retired city employees in the talks: "It will be at least a 6-1 vote."
"Every signal in the universe points to them filing for bankruptcy either Wednesday or Thursday," he said.
Stockton, which has more than $700 million in debt, had been in confidential mediation with 18 creditors, seeking concessions to help fill a $26 million shortfall for the fiscal year beginning on July 1.

The mediation was part of a restructuring plan for the city's battered finances unveiled in February. Representatives for some creditors said a sense of pessimism hung over the talks given their complexity and the scale of Stockton's financial troubles....MORE
 May 31 
Wells Fargo Seizes Stockton, California City Hall Ahead of Possible City Bankruptcy