BIRMINGHAM, Ala. (AP) — A federal judge on Thursday approved a plan by Jefferson County, Ala., to cut and refinance its debt and exit the second-largest municipal bankruptcy in U.S. history.
The county filed for bankruptcy in November 2011, citing more than $4 billion in debt. It was the nation's largest municipal bankruptcy until Detroit filed this year, citing $18 billion in long-term debt.
The bulk of Jefferson County's debt was more than $3 billion from sewer construction. The plan for exiting bankruptcy calls for creditors to reduce the debt by $1.5 billion and for the county to issue nearly $1.8 billion in new debt and raise sewer rates annually.
The county won't be officially out of bankruptcy until it closes the sale of the new debt Dec. 3.
In a hearing before his decision, Bankruptcy Court Judge Thomas Bennett heard opponents say the plan wasn't fair to ratepayers who face rising bills for decades to come. Calvin Griggs, an attorney for one group of sewer customers, said the plan validated the corruption among former Jefferson County officials that led to the sewer debt. Four former commissioners either were convicted or pleaded guilty to public corruption charges related to the construction and financing of sewer system updates.
The county argued its plan was supported by 99 percent of its creditors, and it removed a dark cloud from Alabama's most populous county.
Documents filed Thursday in bankruptcy court showed attorneys and consultants who worked on the bankruptcy case for the county have been paid, or expect to be paid, $25.7 million.