Bankruptcy Judge’s Ruling in City of Stockton Chapter 9 (Municipality) bankruptcy case, which allowed Stockton to reduce its pension debt owed to present and retired City Employees, Is Not a Free Pass for Cities to Cut Pensions, say Experts
Bankruptcy Judge’s Ruling in City of Stockton Chapter 9 (Municipality) bankruptcy case, which allowed Stockton to reduce its pension debt owed to present and retired City Employees, Is Not a Free Pass for Cities to Cut Pensions, say Experts Although Judge Christopher M. Klein ruled on Wednesday in the Stockton, Calif., chapter 9 case that the city could use bankruptcy to wipe away its pension debt, experts do not view the bankruptcy judge’s oral statement as a free pass for other California cities struggling with rising pension costs, the New York Times reported on Friday. “He did give us a tool,” said Richard L. Barnett, mayor of Villa Park, Calif., and a bankruptcy lawyer. “But it’s not a tool the city will be using in the immediate future.” Other analysts said that they doubted there would be a stampede to the courts. CalPERS observed that what Judge Klein said was a signal, but not necessarily a precedent. “It’s not binding on any other bankruptcy court,” said Michael A. Sweet, a partner at the law firm of Fox Rothschild who represents California municipalities in chapter 9. Judge Klein made his remarks orally from the bench on Wednesday, adding that he reserved the right to issue a written opinion later. He adjourned the trial on Stockton’s bankruptcy exit plan until Oct. 30. CalPERS said that it disagreed with what the judge had said, but without a written opinion, it has nothing to take on appeal to a higher court.
Reported in ABI (American Bankruptcy Institute) e-newsletter of 10/7/14