San Bernardino to release bankruptcy exit plan on May 14

Reuters News
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Posted: May 08, 2015 7:14 PM

By Tim Reid

LOS ANGELES (Reuters) - Almost three years after declaring bankruptcy, the southern California city of San Bernardino will issue its long-awaited bankruptcy exit plan on Thursday, May 14, the city mayor said on Friday.

San Bernardino mayor Carey Davis told Reuters in a telephone interview that a copy of the bankruptcy plan, known as a plan of adjustment, will be attached to the agenda for the next council meeting, which will be posted online next Thursday.

Release of the plan will come after a painfully slow bankruptcy process for the city of 205,000, which sits 65 miles east of Los Angeles. It declared bankruptcy in July 2012 with a $45 million deficit.

Two other bankrupt U.S. cities - Detroit, Michigan, and Stockton, California - produced their exit plans much more quickly and have both had their plans of adjustment approved by courts.

Davis conceded that the plan, which will be voted on by the city council on May 18, will still only mark the beginning of months of additional wrangling among the city and its creditors. If the council backs the plan, it will be presented to court by May 30, under a deadline set by the bankruptcy judge overseeing the case.

The city has reached a deal with its biggest creditor Calpers, having agreed to pay in full the giant state pension system with assets of $300 billion.

But other creditors are far from happy. Negotiations with city firefighters, who are suing San Bernardino over contract issues, have broken down. The police union still has not signed off on parts of the bankruptcy deal affecting its members. And bondholders have sued the city over its decision to pay Calpers in full.

"The plan of adjustment has to be confirmed by the court. That confirmation process will take some time. Are we talking a one or two month process? It is not likely it will unfold that quickly," Davis said.

(Reporting by Tim Reid; Editing by Christian Plumb)