In Vallejo, it took four months for lawyers to defend the City’s eligibility to file for bankruptcy. That’s being described as quick when compared to what attorneys are preparing for in Stockton. They think it may take until 2013.
Four of Stockton’s creditors have contested the right of the city to file for bankruptcy. Those objections share one thing in common: CalPERS. The four investment and bond firms all assert that because the city left its largest creditor out of the AB 506 process – whereby the City negotiates to attempt to restructure debt – they did not negotiate in good faith.
However, CalPERS is prepared to go to court to defend their agency.
Stockton has already allocated $3.5 million to fund the first parts of its bankruptcy proceedings.
From the Stockton Record:
The city’s fight to prove that it is in fact eligible for Chapter 9 protection could stretch into early next year, Stockton’s lead bankruptcy attorney said Wednesday.
City officials must first overcome this hurdle before they can begin to restructure Stockton’s finances and exit from bankruptcy, which city officials said going in they expected to happen quickly.
Read the full article here.