A bankruptcy round-up

It’s raining news stories about Stockton’s bankruptcy trial. A sampling:

“The city is not insolvent. Stockton can and should do more to reduce expenses.” — Guy Neal, attorney for the city’s bond insurers.

“This is all about leverage. It is about causing the city pain in an attempt to gain bargaining leverage. Nothing else makes sense.” — Attorney Marc Levinson, representing the city of Stockton, quoted int he Sacramento Bee.

“Ostensibly, the trial that opened Monday in a federal courtroom was about whether Stockton is eligible to file for bankruptcy.
But the real issue – what one attorney called “the 800-pound gorilla in the room” – is whether public employees’ pensions, long thought to be legally untouchable, could be reduced via bankruptcy.” — Dan Walters in the SacBee.

“They’re scared to death. Calpers says, ‘You can’t give us a haircut, because if you do, the world is going to collapse. If it happens in Stockton, it’s going to happen in San Bernardino, and if it happens in San Bernardino it’s going to happen in Modesto, and if it happens in Modesto it’s going to happen in Bakersfield, and if it happens in Bakersfield it’s going to happen in Fresno.’ ” — bankruptcy attorney Michael A. Sweet, quoted in the New York Times.

” … it appears that Stockton’s creditors at least have a shot of winning. If that happens, those workers’ pension and health insurance benefits will almost certainly be in line for trimming.” — The American Thinker.
“If Stockton prevails, the ruling could pave the way for the city to force the principal cuts on bondholders—and set a precedent for other cities to do so.” — Bloomberg Businessweek.
“Mr. Walsh said in court that the city’s bond debt payments take up roughly 7% of the city’s budget, but that city leaders have asked for concessions valued at 44%. With such unfair objectives, the city shouldn’t have access to Chapter 9 bankruptcy protection, which is limited to cities and counties that can prove that they turned to the federal courts insolvent and “in good faith,” he said.” — Dow Jones News.

“All of us have a stake in ensuring Stockton gets back on its feet.” — Robert Tucker, managing director of Assured Guaranty.

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  • Blog Author

    Michael Fitzgerald

    Mike Fitzgerald is The Record’s award-winning metro columnist. His column runs in the paper three times a week. Born in San Francisco, he was raised in Stockton. His column covers diverse beats including, sometimes, the offbeat. Read Full
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