Stockton, Calif., won court approval of its plan to exit bankruptcy by paying bond investors pennies on the dollar while shielding public pensions, in a case closely watched by other cities facing heavy retiree costs, Bloomberg News reported yesterday. “This plan, I’m persuaded, is the best that could be done in terms of restructuring the city’s debts,” Bankruptcy Judge Christopher Klein said at a hearing yesterday. Bankruptcy lawyers and pension advocates nationwide have been following the case to see whether pensions administered by the California Public Employees’ Retirement System would be protected from cuts. Judge Klein ruled earlier that CalPERS doesn’t deserve special protection, the first time the biggest U.S. public pension fund was found vulnerable to cuts in a bankruptcy. CalPERS and public-worker groups decried the decision. A bankruptcy judge in Detroit also ruled against pension funds in a similar situation.
