Joel R. Glucksman
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Jefferson County, Alabama Approves Another Bankruptcy Settlement
Author: Joel R. Glucksman
Date: July 11, 2013
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As Jefferson County, Alabama, makes headway toward exiting bankruptcy law proceedings, county commissioners have approved another bankruptcy settlement plan to help the county regain solid financial footing.
In a 4-1 vote, the county commission panel approved sewer fee hikes of 7.4 percent for four years and 3.4 percent for 40 years. At present, the majority of the county’s $4.2 billion debt stems from bonds that funded sewer system repairs, and county commissioners have been struggling to reach a resolution.
Commissioner George Bowman, who opposed the plan, noted that sewer fee hikes would place an undue burden on the residents of his district.
“The bill for the exit for the county out of bankruptcy will be put on the poor and all of the rate payers in Jefferson County,” Bowman told local news station WBRC.
Despite opposition to sewer rate hikes, Judge Thomas Bennett has halted all legal complaints relating to the county’s bankruptcy case. Instead, he said that all complaints can be raised during the confirmation process for Jefferson County’s plan for exiting bankruptcy.
Separately, Jefferson County approved another negotiated settlement that will cover $138 million of creditors’ claims, Reuters reports. Under its plan of adjustment, the county will sell $1.9 billion of refinancing debt, and has already reached agreements with Bank of Nova Scotia, State Street Bank & Trust and Bank of New York Mellon, which were the county’s liquidity banks during its bankruptcy. The deal will allow the banks to recoup 80 cents on the dollar, as well as $2.7 million to satisfy claims of more than $20 million for interest costs tied to defaulted sewer debt, Reuters explained.
The plan will be filed with the U.S. Bankruptcy Court for the Northern District of Alabama, and is still subject to court approval. If the plan is allowed to move forward, the settlement will end the largest municipal bankruptcy in U.S. history. This, of course, assumes that Detroit, Michigan, does not file for bankruptcy protection and break all existing records.
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