State Bankruptcy Carries Problems, Experts Tell House

Law360, New York (February 14, 2011, 8:16 PM EST) -- Financial and legal experts told legislators Monday that establishing a state bankruptcy option to address the risk of underfunded state pension plans would wreak havoc with municipal bond markets and could amount to an unconstitutional overstep of states' sovereignty.

Solutions exist beyond bankruptcy to deal with the stormy financial forecasts many states are now facing, Chapman & Cutler LLP partner James Spiotto told the House Judiciary Committee subcommittee on courts, commercial and administrative law.

The House subcommittee called Monday's hearing to consider the possible effects of...
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