Current city-vs.-Franklin situation

Until recently, Stockton was proposing to repay Franklin less than $93,000 of a $35-million debt. Now the debt is about $37 million (think interest) and the city’s proposed repayment, which still doesn’t entice Franklin, is $350,000. Stacey Coleman, a spokeswoman for Franklin, explained in an email last week:

“In the adversary proceeding commenced by Franklin, the City has now stipulated to a Judgment in favor of Franklin declaring that the agreements underlying Franklin’s bonds are not leases within the meaning of the Bankruptcy Code.  One consequence of that Judgment is that the City no longer is able to argue that the amount of Franklin’s claim should be capped at three years of debt service payments (approximately $10 million), which would have resulted in a payment of approximately $95,000 under the City’s proposed plan. Rather, the City’s concession means that Franklin’s claim is in an amount of at least $37 million, which equates to a payment of approximately $350,000 under the proposed plan.”

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