Stockton, California, testing a new state requirement that municipalities try mediation before seeking bankruptcy protection, made formal requests to creditors to take part, according to a lawyer for the city.
Central Falls, the first city in Rhode Island’s 222-year history to go bankrupt, is preparing to exit court protection after 13 months by keeping bondholders whole while raising taxes and cutting workers and pensions.
Jefferson County, Alabama, declared the largest municipal bankruptcy in U.S. history, capping a more than three-year saga that turned it into one of the biggest casualties of Wall Street’s credit crisis.
Stockton, California, may take the first steps toward becoming the most populous U.S. city to file for bankruptcy next week because of burdensome employee costs, excessive debt and bookkeeping errors that misrepresented accounts, city officials said yesterday.
Removing Stockton, California, from federal bankruptcy protection will require that creditors such as Assured Guaranty Corp. and Franklin Resources Inc. prove the city isn’t truly insolvent, and that its leaders didn’t negotiate a potential settlement in good faith.
The Stockton, California, City Council voted to authorize a bankruptcy filing as soon as June 26 if officials fail to win concessions from creditors that would allow it to avoid becoming the biggest U.S. city to enter court protection.