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.
Stockton, the bankrupt California city seeking to resolve $1.18 billion in claims, is in the rare position of fighting a creditor in court to win approval of its debt-cutting plan, a dispute that may presage a much larger battle coming to Detroit.
Jefferson County, Alabama, officials shouldn’t worry that a bankruptcy filing will damage their ability to borrow money in the future, said lawyers who guided other municipalities through two of the biggest court-supervised restructurings. The markets will forget, they said.
Stockton, California, creditors asked a judge to end its bankruptcy case, saying at the start of a four-day trial that the city should cut excessive employee pay and pension benefits before seeking court protection.
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.
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.