Lawyers for Stockton, Calif.’s bondholders, who face a fight with the bankrupt city over proposed cuts, will arrive in court today armed with fewer weapons than investors owed money by reorganizing companies, Bloomberg News reported today. Stockton is trying to become the first American city to use bankruptcy to successfully impose losses on bondholders. Bondholders will be limited to two main options if they are to block Stockton in court, said Lee Bogdanoff, a bankruptcy attorney: get the case thrown out or defeat the city’s reorganization proposal. The initial hearing in the case is scheduled for today in U.S. Bankruptcy Court in Sacramento. City council members have set aside more than $3 million for the first year of a bankruptcy court fight with bondholders and labor unions over how to divide a smaller budget.
