San Bernardino Bankruptcy OK Gives Troubled Cities Leverage

Law360, San Diego (August 30, 2013, 8:50 PM EDT) -- A California federal judge’s Wednesday ruling that the city of San Bernardino could remain under bankruptcy protection based on its insolvency and lack of alternatives sets a low bar for Chapter 9 eligibility and boosts distressed municipalities’ leverage in prebankruptcy negotiations with creditors including pension funds, lawyers say.

In granting the city’s request to continue under Chapter 9, Judge Meredith Jury held that city officials satisfied all the requirements of state and federal law before they placed the city in bankruptcy and concluded that the bankruptcy...
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