A full story will appear online and in Thursday’s paper, but here’s some of what a few people had to say today on the eve of federal Judge Christopher Klein’s expected ruling in the Stockton bankruptcy.
FORMER CITY MANAGER BOB DEIS
“I can’t imagine it would be a thumbs-down scenario. I am hopeful that it’s thumbs up. It’s time for the city to be able to move on and get this difficult chapter behind it. I guess there’s always a chance there might be a piece of the plan that he might want to see addressed but I would be completely shocked to see a thumbs down on the overall plan. The judge from the outset encouraged the city to negotiate deals and we got deals with everyone but one creditor (Franklin Templeton Investments). And what’s interesting, this is the one creditor that was the last one to loan money to a city that was already showing fiscal distress (in 2009). … I just find it ironic … I think there were enough signs that should have given them pause.”
MICHAEL SWEET, BANKRUPTCY ATTORNEY
“I think given how far the case has come, it’s unlikely the judge will deny confirmation, although he has expressed from the beginning of the case serious concerns about how the city has dealt with its pension obligations through the bankruptcy so I suspect we will hear more about that.”
“I think it’s highly unlikely confirmation will be denied … if he doesn’t confirm the plan it will be because he wants to see the city and Franklin work something out.”
KAROL DENNISTON, BANKRUPTCY ATTORNEY
“I still think it’s a close call. I think the court was hoping the parties might talk settlement in the intervening period but there’s absolutely no evidence of that. I’d be willing to bet that within the first two or three minutes of the hearing we’ll know which way this is going.”
“The bankruptcy code clearly allows a city to decide its own destiny. The court’s only choice is up or down. So many factors have to be weighed. I think it’s impossible to know all of the competing factors.”
“I think tomorrow you can expect a for-real ruling on confirmation. But I have to give the caveat that this is Chapter 9 and anything is possible.”
“If the court denies confirmation, essentially Stockton will be back at square one. It will all be a do-over in terms of whatever the court’s findings are in terms of why it did not confirm the plan.”
JEFF MICHAEL, DIRECTOR, UOP BUSINESS FORECASTING CENTER
“I think barring a last-minute settlement I think he’ll reject the plan based on what I’ve heard so far … primarily because it’s unfair to Franklin. I think Franklin would have a case for it to be unfair. The plan treats them very poorly compared to other unsecured creditors.”
“It’ll be interesting … the big question to me is if he does reject it, what’s next?”
“(If the plan is confirmed) the city will have a lot more certainty over its future budget, which will help it a lot with future planning. There’s definitely a cloud hanging over everything now. It certainly can be a boost to the city’s image. … The city will still be suffering consequences. All will still not be well with the city. It still will be a very tight budget. It certainly doesn’t mean we’ll start to see money flowing into city services but it will allow the city to move forward.”
Here’s what Franklin had to say most recently.
For their part, City Manager Kurt Wilson and attorney Marc Levinson have been attending the School of Loose Lips Sink Ships recently.