CITIES AROUND THE NATION DECLARING BANKRUPTCY
Cities Going Bankrupt
There is a lot of news about cities and towns filling for bankruptcy especially in California.
The city of Stockton turns out to be the largest bankruptcy filing of a municipality or city ever.
Then there was some discussion by the way “what about New York City”? Well New York City did not file bankruptcy back in the eighties, when they were having so much financial difficulty.
They found other ways around that but the city of Stockton filed a chapter nine bankruptcy proceeding there’s a specific chapter for cities to file bankruptcy, it is not used very often at least it hasn’t been historically; but now there appears to be a bit of a rash, there’s now a new announcement that the town of Mammoth lakes California which is a ski resort sort of area is also going to file a bankruptcy.
That would be in chapter nine as well. Chapter nine is a reorganization type bankruptcy it allows a city to retain essential services like utilities, police, and fire and those kinds of things while it deals with it as best it can, its creditors.
So that creditors cannot clean up bank accounts and such, cause problems with the suing judgments and all those kinds of things.
In the city of Stockton’s case apparently what happened there was they simply overspent, they built some facilities that they wanted to attract for example a sports arena type place and they did some things that lead some problems in their ability to repay that,; so that has been their problem.
With the city of Mammoth lakes it was about a lawsuit with a developer. Which they lost and now they have a multi-million dollar judgment against them for legal fees.
So those doggone attorneys have caused another problem. I say that tongue-n-cheek, there was obviously a problem here how that case went down; but the city of Mammoth lakes had to file bankruptcy now only because it had this judgment; by the way since 2008 but also because they had a bad snow year in 2011-2012.
So they where not able to generate revenues to keep the creditors off its back. So there’s a bankruptcy proceeding that’s going on there pretty soon.
What we do as individuals for bankruptcy generally is either chapter seven of liquidation or chapter thirteen which is reorganization were you can make monthly payments, get the creditors off your back, pay what you can and it really does provide a great degree of peace and satisfaction when you are going through it.