Wednesday, November 09, 2011
Alabama Files Largest Bankruptcy in US History
Earlier today, Jefferson County commissioners met to decide whether the county should continue to pursue a settlement with creditors or file for Chapter 9 municipal bankruptcy. They voted 4-1 to file a record-setting bankruptcy for the municipal debt load of $3.14 billion.
Alabama Governor Robert Bentley was disappointed by the decision and had hoped that city commissioners would continue to work towards a settlement with the county's creditors. The creditor who arranged the most bonds – and thus stands to lose the most – is JPMorgan Chase & Co. Prior to the meeting, Governor Bentley had promised to help the county find a solution that did not involve bankruptcy.
A settlement proposed in September included $1.1 billion in concessions and a sewer rate increase of 8.2 percent for the first three years (much of the county's debt is sewer debt). Although this settlement seemed promising, the county was unable to get creditors on board with it. Also, the 25-member county legislature was not in agreement for the bills that would need to be passed to initiate the settlement.
Jefferson County's bankruptcy exceeds the previous $1.6 billion Chapter 9 record set by Orange County, California in 1994.
To learn more about filing for bankruptcy, please contact an experienced bankruptcy lawyer in your area.