The 90-day mediation process will seem lightning fast compared to the 40-year recovery plan that Stockton outlined in its initial filing to its bankruptcy judge.
The plan has three main phases when dealing with the sea of debt that helped force Stockton into bankruptcy. First, they are asking for a five-year moratorium on paying their creditors. The next five years will be spent paying down only the interest. The remaining 30 years will be spent paying down principal.
They are not looking to cut pensions to retirees. Instead, they are hoping to cancel all future payments on $125 million in pension obligation bonds. Additionally, they are offering their gentrified marina back to the state. If they state rejects the plan, the city will continue operating the marina but will not pay its debt service.
From the Record Net.com:
City officials seek a five-year holiday from paying Stockton’s debt to creditors, giving it breathing space to reorganize its finances, according to a massive document filed Friday in federal court supporting its bankruptcy case.
In a 40-year plan, the city intends for the second five-year period to begin paying only the interest Stockton owes. For the remaining 30 years, the city will work down the principal on its debt to bond holders.
Read the full article here.