15 April 2014

Municipal Financial Distress Resolved!

Props to Juliet Moringiello, the staff of the Widener Law Journal, and the many speakers at Monday's symposium "Solving the Problem of Municipal Financial Distress." Along with the many in attendance, I concur the symposium was a great success.

The morning saw two panels that focused on current and potential developments in Chapter 9 (municipal) bankruptcy. I was part of the second panel that looked at standards for confirmation of a Chapter 9 plan of adjustment. With pre-symposium planning by Mark Kaufman, additional panelists Guy Neal, David Skeel, and I, together with moderator Michael Hussey, managed to keep the crowd entertained and informed about the largely unlitigated "back-half" issues in Chapter 9.

Issues of a municipality's eligibility to be in Chapter 9 have gotten all the attention so far but we can expect to see some law made next month in the confirmation of the plan of Stockton and later this summer for Detroit. Among the topics of our discussion were the three-fold requirements that a plan be fair and equitable, not discriminate unfairly, and be in the best interests of creditors. There's plenty of room for disagreement about these tests because their history in Chapter 11, place in Chapter 9, and lack of reported decisions make their application to municipalities uncertain.

The afternoon sessions addressed the macro-problems of American cities, problems to which Chapter 9 offers only a small part of a solution. I plan to post on all the other panels in due course but urge folks to keep their eyes open for the fall 2014 issue of the Widener Law Journal to see the range of topics addressed at this symposium.

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