The city of Stockton, Calif., said Wednesday that it would stop bond payments but maintain city services at current reduced levels if it is forced to file for bankruptcy later this month, Reuters reported today. Stockton is in mediation with its creditors in an effort to avert a rare municipal bankruptcy filing for the city of 292,000 people about 85 miles east of San Francisco. But with a June 25 deadline looming for the mediation and a July 1 deadline for adopting a balanced budget, the city needs to move forward with a so-called pendency plan that assumes a bankruptcy filing, city manager Bob Deis said. Stockton, which has already suspended some bond payments, needs concessions from creditors to eliminate a $26 million deficit or it will become the biggest U.S. city to file for bankruptcy.
