San Bernardino creditors attack city's debt payment plan

Reuters News
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Posted: Oct 08, 2015 9:21 PM

By Rory Carroll

SAN FRANCISCO (Reuters) - Creditors objected to elements of the city of San Bernardino's initial debt payment plan at a U.S. Bankruptcy Court hearing on Thursday, saying the city was not being forthcoming about what assets it had and complaining about the lengthy process.

San Bernardino has proposed paying a penny on the dollar on nearly $50 million in pension obligation bonds held by EEPK, the Luxembourg-based bank and the city's second largest creditor behind the California Public Employee Retirement System.

Representing EEPK at the hearing in Riverside, California, Vince Marriott said the city had failed to reveal to creditors how much property it owned, its value, and whether it could be liquidated.

"While the court cannot force the city to sell anything, it can refuse to confirm a plan of adjustment that does not provide for a fair use of sources of recovery," Marriott said.

"I don't think it's a fair answer to requests for those disclosures to say it's not relevant because the city cannot be forced to sell the assets."

Representing the city of San Bernardino, Paul Glassman said the city would identify any excess properties but said the creditors were misguided if they thought there were great sums of money to be had through their sale.

"To think that there's any sort of pot of gold with respect to the properties of the city is disingenuous," Glassman said.

"Unfortunately the city of San Bernardino does not have an art collection worth hundreds of millions of dollars," he said.

Marriott also complained about the long process of approving a plan. The city first filed for bankruptcy in August 2012 as it faced a $45 million deficit.

Judge Meredith Jury agreed that the process was lengthy and said the next hearing would be held prior to the New Year, and set a date of Dec. 23.

The case is In Re: City of San Bernardino, California, Case No. 6:12-BK-28006-MJ in the U.S. Bankruptcy Court, Central District of California.   

(Reporting by Rory Carroll; Additional reporting by Jim Christie; Editing by Ken Wills)