12 May 2014

Latest Municipal Bankruptcy Developments (And a Picture!)

Detroit seems to be forging ahead. Reuters reports here that Michigan's Republican governor and now its Republican House Speaker are pushing for a $350 billion state contribution to Detroit's bankruptcy plan, albeit with strings attached (primarily in the form of post-bankruptcy financial oversight). The same article reports, however, that several of Detroit's large public employee unions are balking at the plan of adjustment as currently formulated. No surprise as they've already appealed the bankruptcy judge's decision to permit Detroit even to be in bankruptcy.

The forecast for San Bernadino, the little engine that thinks it can (take on CalPERS, the uber-powerful California public employees retirement fund), is a bit cloudy. Another Reuters report here observes that Judge Jury (yes, there's really a judge whose last name is Jury) "expressed frustration" over the slow pace of negotiations between the city and CalPERS. Not a surprise as CalPERS has taken the very public position that government employee pensions may not be touched. Ever.

The solution is quite simple: Read my article Municipal Bankruptcy: When Doing Less Is Doing Best, just out in the latest issue of the American Bankruptcy Law Journal.

It's not yet available online but I'll be glad to send a reprint to folks who ask.

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