Monday, October 17, 2011
Jefferson County, AL Veering Away from Bankruptcy Settlement
There is still a possibility that Jefferson County, Alabama will be filing the largest municipal bankruptcy in history.
In September, county commissioners and debt holders reached an agreement, but the terms of the agreement depend on the passage of various state laws, including sewer rate increases. Some legislators have expressed opposition to the settlement. A legislative session has yet to be scheduled and the city is again facing an ominous Chapter 9 bankruptcy.
The county has been struggling since 2008 due to a $3 billion sewer debt. Also, 44 percent of the county’s discretionary revenue stemmed from an occupational tax, which was found to be unconstitutional by the state Supreme Court. The county laid off hundreds of employees as a result of the finding.
If Jefferson County does file for bankruptcy, it will be a historical amount topping the record $1.6 billion of debt that led to Orange County, California’s Chapter 9 filing in 1994.
The fate of the laws that are part of Jefferson County’s settlement now lay in the hands of state legislators.
A growing number of municipalities are facing bankruptcy. To learn more, please contact an experienced bankruptcy lawyer in your area.
posted by Tess @ 3:05 PM
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