Contact: John Hartgen
703-894-5935
href='mailto:jhartgen@abiworld.org'>jhartgen@abiworld.org
ABI QUICK POLL RESPONSES MIXED AS TO WHETHER
MUNICIPALITIES SHOULD BE REQUIRED TO GO THROUGH MEDIATION BEFORE FILING
FOR CHAPTER 9
September 15, 2011, Alexandria, Va.— Though
not achieving a majority, more respondents in a closely divided ABI
Quick Poll thought that local governments should be required to first go
through mediation before filing for chapter 9. Forty-nine percent agreed
(30 percent “strongly agreed” and 19 percent “somewhat
agreed”) and 44 percent disagreed (33 percent “strongly
disagreed” and 11 percent “somewhat disagreed”) that
mediation should be required prior to a municipal government filing for
chapter 9. Five percent “did not know or had no opinion” on
the question.
Chapter 9 of the Bankruptcy Code provides for the reorganization of
municipalities (including cities and towns, as well as villages,
counties, taxing districts, municipal utilities and school districts).
Financially struggling towns and local governments looking to recover
from the recent recession are finding it harder to restructure debts
accrued for infrastructure costs, as well as employee-related costs for
health care, pensions and wages. Alabama’s Jefferson County is
trying to avert a chapter 9 filing by continuing to work on an agreement
with creditors of a failed sewer-bond refinancing. Harrisburg, the
capital of Pennsylvania, is still negotiating debt payments on an
incinerator system that has had the city’s council discussing a
chapter 9 filing since 2009.
In California, legislation designed to limit the discretion of cities,
counties, special districts and other public agencies from filing for
bankruptcy is headed to Gov. Jerry Brown (D) after passing the state
legislature earlier this month. Assembly Bill 506 would bar local
government agencies from filing for bankruptcy until they undergo
mediation or hold a public hearing and declare a fiscal emergency
threatening the health, safety or well-being of residents. The bill is a
priority for public employee unions whose contracts might be disturbed
by a chapter 9 filing.
ABI’s Quick Poll is posted on ABI’s home page,
href='http://www.abiworld.org/'>www.abiworld.org. ABI members and
the public are invited to respond to a question on a timely bankruptcy
or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>http://www.abiworld.net/quickpoll/
to access the results of previous ABI Quick Polls.
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dedicated to research and education on matters related to insolvency.
ABI was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The ABI membership includes over 13,000
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specialists and other bankruptcy professionals, providing a forum for
the exchange of ideas and information. For additional information on
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