Go here to read an excellent news account about what's still at stake in the Stockton, California municipal bankruptcy. As I noted last week, Judge Klein concluded that Stockton had the power under the Bankruptcy Code to cut pensions notwithstanding state law to the contrary. The city, however, doesn't want to cut pensions and the news report adds that its lone holdout creditor doesn't care.
The report goes on to note--quite correctly--that the court has an independent obligation to find a city's plan is "feasible" before confirming it. And feasibility remains the nub of Stockton's confirmation battle. For more about feasibility read my article Municipal Bankruptcy: When Doing Less Is Doing Best (download here).
For what it's worth, I believe Judge Klein will ultimately find that Stockton's plan is feasible. Without a stakeholder leading the feasibility charge, I don't see a judge taking up that cudgel and administering a beatdown on his own. Yet even if Stockton's plan is confirmed, stay tuned to see if the city runs back to bankruptcy court within a decade.
The report goes on to note--quite correctly--that the court has an independent obligation to find a city's plan is "feasible" before confirming it. And feasibility remains the nub of Stockton's confirmation battle. For more about feasibility read my article Municipal Bankruptcy: When Doing Less Is Doing Best (download here).
For what it's worth, I believe Judge Klein will ultimately find that Stockton's plan is feasible. Without a stakeholder leading the feasibility charge, I don't see a judge taking up that cudgel and administering a beatdown on his own. Yet even if Stockton's plan is confirmed, stay tuned to see if the city runs back to bankruptcy court within a decade.
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