Shortly after the closing arguments in the Detroit bankruptcy, Stockton’s Bankruptcy plan was approved.
U.S. Bankruptcy Judge Christopher Klein issued a ruling on Oct. 30, which approved a restructuring plan proposed by Stockton, California, according to the Associated Press. The city will be allowed to reorganize over $900 million in long-term debt as a part of Stockton’s bankruptcy plan. With this ruling the city can emerge from the past two years of financial uncertainty following its decision to file for protection under Chapter 9 of the bankruptcy law in 2012.
“This plan, I’m persuaded, is the best that can be done in terms of restructuring an adjustment of the debts of the city of Stockton,” Klein said, according to the news source.
In a landmark ruling earlier in October, Klein also ruled that the city’s pensions could be reduced in municipal bankruptcy, according to Reuters. This opened the door for negotiations between the city and the California Public Employees’ Retirement System, or Calpers, though the city expressed its opposition to the idea.
At times during the bankruptcy, Klein referred to the issue of the pensions as “a festering sore,” that required the court “to get in there and excise it and figure out what the story is,” according to the news source.
The city opted not to negotiate with Calpers, but reached deals with all major creditors except Franklin Templeton Investments, The Associated Press reported. The firm argued that it was being treated unfairly in the ructuring plan, which doesn’t touch the pension fund but asks it to walk away from almost $32.5 million.
“Obviously we are disappointed,” Franklin Templeton’s attorney, James Johnston, told the judge, according to Reuters. “We will evaluate our next steps.”
The city of Stockton’s future looked bright just before the recession, as legislators approved millions for revitalizing downtown areas and other projects. During the recession, however, much of that financed real estate lost value, contributing to a fiscal disaster.
Get the full story of Stockton’s Bankruptcy Plan from my previous posts:
Fitch: Stockton Bankruptcy Likely To Affect Future Municipal Bankruptcy Negotiations
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
