Apropos of earlier posts (here and here) about the Chapter 9 of the City of Stockton, California, comes today's news here (Reuters; paywall perhaps) that Stockton plans to file a plan of adjustment "as early as July" (don't bet on it). The question that's even bigger than where Tim Tebow (here; j/k) will play football next season is how Stockton will treat its bondholders vis-à-vis CalPERS (short for the California Public Employee Retirement System).
The article quotes the city's lawyer, Marc Levinson, making cooing sounds about everyone negotiating to a consensus but I don't see that happening unless Stockton rejects its retiree benefits contracts or CalPERS cuts the city some slack on what it must pay or some combination of the two. The only remaining possibility I can foresee would be for the city to promise everyone everything but if Stockton had that kind of money (or rather, if it's taxpayers could afford that kind of money), it wouldn't be in bankruptcy.
If, as some reports have suggested, Stockton's plan promises a substantial haircut for its bondholders (or rather, again, its bondholders' insurers), they will fight it from the Bankruptcy Court, through the Ninth Circuit BAP (Bankruptcy Appellate Panel), to the Ninth Circuit, and beyond. A negotiated settlement is indeed in everyone's interests but unless some heretofore immovable objects give at least a little, I don't see it happening.
The article quotes the city's lawyer, Marc Levinson, making cooing sounds about everyone negotiating to a consensus but I don't see that happening unless Stockton rejects its retiree benefits contracts or CalPERS cuts the city some slack on what it must pay or some combination of the two. The only remaining possibility I can foresee would be for the city to promise everyone everything but if Stockton had that kind of money (or rather, if it's taxpayers could afford that kind of money), it wouldn't be in bankruptcy.
If, as some reports have suggested, Stockton's plan promises a substantial haircut for its bondholders (or rather, again, its bondholders' insurers), they will fight it from the Bankruptcy Court, through the Ninth Circuit BAP (Bankruptcy Appellate Panel), to the Ninth Circuit, and beyond. A negotiated settlement is indeed in everyone's interests but unless some heretofore immovable objects give at least a little, I don't see it happening.
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