Skip to comments.Stockton Becomes Biggest US City To Declare Bankruptcy (It's Official)
Posted on 04/01/2013 12:46:47 PM PDT by Zakeet
A mere nine months after we first discussed the inevitability of Stockton, CA.'s bankruptcy, a judge has ordered today that the city will now become the most populous in the US to be declared bankrupt.
*STOCKTON CREDITORS DIDN'T NEGOTIATE IN GOOD FAITH, JUDGE SAYS
Creditors are pushing to get the city out of bankruptcy but the judge states that "by any measure" the city was insolvent. So, in summary, yeah, it was broke years ago, it still is broke - despite the best efforts by the Central Planning Reserve to reflate the same housing bubble that was the primary reason for the city's insolvency in the first place. Only this time, it's official!
Stockton, California, was ruled eligible for bankruptcy protection under Chapter 9 of the U.S. bankruptcy code, a U.S. judged said on Monday, turning aside creditors' arguments that the city was not truly insolvent when it sought protection last year and had improperly failed to seek concessions.
In a case that has been widely watched by the $3.7 trillion municipal bond market, U.S. Bankruptcy Judge Christopher Klein said Stockton had established during last week's three-day trial that it had met requirements to be found eligible to proceed with its municipal bankruptcy case.
Officials in the city of nearly 300,000, the largest city so far to have filed for municipal bankruptcy, will now be allowed to start drafting a so-called plan of adjustment for the city's debts.
The case is expected to pit municipal bondholders against the California Public Employee Retirement System, which manages pensions for Stockton and many other California governments.
This is not going to be much of a problem so long as we are allowed to continue to raise taxes, empty prisons, confiscate guns, import more illegal voters from across the border, fund millions of EBT cards each month, celebrate gay marriages, and build my choo-choo ... and if not, then things might just start to get dicey out here in the Socialist Worker's paradise.
What about NYC??? I think it’s bigger than Stockton.
If they screw the bond holders in favor of the CALPERS leeches, there won’t be a city in that state that will be able to raise money via public bonds any more. They’ll have to rape their public employee pensioners at some point.
Liberals spending themselves into poverty and taking their voters with them.
Problem is, they are also dragging along those who didn’t vote for this mess.
Hear that loud sucking sound?
I think the secret plan is a federal guarantee for state issued bonds, likely for NY, IL, and CA.
Bankruptcy will allow the city to void all the contracts and financial obligations they currently have with the public employee labor unions. The city tried to negotiate with the unions but they refused. Now they will get nothing, no pensions, no healthcare, nothing. This ruling will have an effect elsewhere think Illinois, Michigan and other cities and states where the corrupt labor unions have driven the taxpayers into the ground.
That may well be true, but it will have to have some kind of impact, at least on commercial credit ratings. It is the same kind of signal one sends when they can’t get a car loan unless their daddy co-signs for them.
Creditors will come back, they usually do.
I wish what you are saying would be true. People are idiots to buy CA bonds, but this won't stop them - though they may ask for a better return.
If the bondholders get raped it will effect every other city in the state when they try to issue bonds. If the public sector unions get raped...well...nothing much happens. They don’t get to vote for fed judges or bondholders.
The unions bankrupt the cities, break it off in their...
Why limit the thrill of unlimited Baraqqi/Bernanke/Lew minibucks to the fedgov?
Let Govs Moobeam, Cuomo, and Mayor Rhambo share the intoxication.
IIRC CalPERs is one of, if not the, largest owner of commercial real estate in the country. If CalPERs starts getting exposed to massive liability caused by their fantasy math over the last few decades expect huge ripples in other industries.
Stockton is leading the way and showing them all how it’s done.
Good — may the Stockton solution spread
If Stockton is allowed to cancel the Union Contracts and revoke the pensions this is gonna get real ugly real quick!
If they’re “allowed” to do that, ie, they get away with it, I foresee a lot more municipalities doing the same thing.
However, if they get bailed out by the feds, this ball will stay in the air just a bit longer, but crash all the harder.
And once that genie comes out of the bottle it won't go back. And then it will spread all across the states dragging us all down!
It’s not whether we’re going to take a hit,
but when and who is going to take the hit.
If they renege on the union contracts, it’ll just be the “retirees and pensioners” that take the hit.
If they’re bailed out by the feds, the world takes the hit.
This must be an April Fools joke...Krugman says Republicans are lying about the dire financial straights in CA.
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