Shortly after the closing arguments in the Detroit bankruptcy, Stockton’s Bankruptcy plan was approved.
U.S. Bankruptcy Judge Christopher Klein issued a ruling on Oct. 30, which approved a restructuring plan proposed by Stockton, California, according to the Associated Press. The city will be allowed to reorganize over $900 million in long-term debt as a part of Stockton’s bankruptcy plan. With this ruling the city can emerge from the past two years of financial uncertainty following its decision to file for protection under Chapter 9 of the bankruptcy law in 2012.
“This plan, I’m persuaded, is the best that can be done in terms of restructuring an adjustment of the debts of the city of Stockton,” Klein said, according to the news source.
In a landmark ruling earlier in October, Klein also ruled that the city’s pensions could be reduced in municipal bankruptcy, according to Reuters. This opened the door for negotiations between the city and the California Public Employees’ Retirement System, or Calpers, though the city expressed its opposition to the idea.
At times during the bankruptcy, Klein referred to the issue of the pensions as “a festering sore,” that required the court “to get in there and excise it and figure out what the story is,” according to the news source.
The city opted not to negotiate with Calpers, but reached deals with all major creditors except Franklin Templeton Investments, The Associated Press reported. The firm argued that it was being treated unfairly in the ructuring plan, which doesn’t touch the pension fund but asks it to walk away from almost $32.5 million.
“Obviously we are disappointed,” Franklin Templeton’s attorney, James Johnston, told the judge, according to Reuters. “We will evaluate our next steps.”
The city of Stockton’s future looked bright just before the recession, as legislators approved millions for revitalizing downtown areas and other projects. During the recession, however, much of that financed real estate lost value, contributing to a fiscal disaster.
Get the full story of Stockton’s Bankruptcy Plan from my previous posts:
Fitch: Stockton Bankruptcy Likely To Affect Future Municipal Bankruptcy Negotiations
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
