In a move to avoid the largest municipal bankruptcy in U.S. history, holders of more than $3 billion in debt issued by Jefferson County, Ala., are working on a rescue that would leave them with steep losses.
The offer calls for bondholders to forgive about $1 billion of the $3.14 billion in sewer debt owed by Alabama's most populous county, which has about 665,000 residents, a person familiar with the matter said.
Banks, hedge funds and mom-and-pop investors that own the sewer bonds are scrambling to agree on concessions before a Thursday meeting, where officials in Jefferson County, which includes Birmingham, might decide to file for bankruptcy.
As of late Tuesday, the situation remained fluid, and it was possible the last-ditch offer would fall apart.
John S. Young, a court-appointed receiver who is participating in the talks, said bondholders still "have a way to go."
The deal being worked on also includes money that would be set aside to help struggling Jefferson County residents pay their sewer bills, a person familiar with the matter said.
http://online.wsj.com/article/SB100...00614.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Maybe Europe should launch a financial news tabloid called "European Times" and publish every single day headlines like "New York´s debt/GDP ratio rises over 179%" or "Los Angeles citizen not paying their pool taxes"...
But maybe the answer to all US problems can be found here:
Municipal Bankruptcy:
Avoiding and Using Chapter 9
in Times of Fiscal Stress
Introduction
Municipalities1 have been increasingly squeezed between the cost of providing basic services (which in general has been increasing at a rate significantly higher than inflation) and flat or declining revenues (due to the economic slowdown and in particular the difficulties in the housing market affecting property tax revenues and spending patterns). In the face of these pressures, the possibility that some may want or need to seek protection under chapter2 9 of the United States Bankruptcy Code has become more real. In May 2008, the City of Vallejo, California filed a chapter 9 petition, and several other California municipalities have been reported in the media to be considering a filing. Jefferson County, Alabama, also has been reported to be on the edge of filing for several months due to financial problems with its sewer system, among other things. Whether this is the start of a larger trend remains to be seen, but it is clear that the stresses that can produce the drastic step of filing for bankruptcy protection currently are affecting many municipalities.
http://www.orrick.com/fileupload/1736.pdf
The offer calls for bondholders to forgive about $1 billion of the $3.14 billion in sewer debt owed by Alabama's most populous county, which has about 665,000 residents, a person familiar with the matter said.
Banks, hedge funds and mom-and-pop investors that own the sewer bonds are scrambling to agree on concessions before a Thursday meeting, where officials in Jefferson County, which includes Birmingham, might decide to file for bankruptcy.
As of late Tuesday, the situation remained fluid, and it was possible the last-ditch offer would fall apart.
John S. Young, a court-appointed receiver who is participating in the talks, said bondholders still "have a way to go."
The deal being worked on also includes money that would be set aside to help struggling Jefferson County residents pay their sewer bills, a person familiar with the matter said.
http://online.wsj.com/article/SB100...00614.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Maybe Europe should launch a financial news tabloid called "European Times" and publish every single day headlines like "New York´s debt/GDP ratio rises over 179%" or "Los Angeles citizen not paying their pool taxes"...
But maybe the answer to all US problems can be found here:
Municipal Bankruptcy:
Avoiding and Using Chapter 9
in Times of Fiscal Stress
Introduction
Municipalities1 have been increasingly squeezed between the cost of providing basic services (which in general has been increasing at a rate significantly higher than inflation) and flat or declining revenues (due to the economic slowdown and in particular the difficulties in the housing market affecting property tax revenues and spending patterns). In the face of these pressures, the possibility that some may want or need to seek protection under chapter2 9 of the United States Bankruptcy Code has become more real. In May 2008, the City of Vallejo, California filed a chapter 9 petition, and several other California municipalities have been reported in the media to be considering a filing. Jefferson County, Alabama, also has been reported to be on the edge of filing for several months due to financial problems with its sewer system, among other things. Whether this is the start of a larger trend remains to be seen, but it is clear that the stresses that can produce the drastic step of filing for bankruptcy protection currently are affecting many municipalities.
http://www.orrick.com/fileupload/1736.pdf