The U.S. Court of Appeals in San Francisco ruled that the California Public Employees’ Retirement System can challenge the legality of San Bernardino, California’s bankruptcy, Bloomberg News reported yesterday. The largest U.S. public employees’ pension can try in August to persuade the appeals court to overturn a lower court decision finding that the insolvent desert city was eligible for bankruptcy protection. CalPERS and the city have been in court-ordered mediation since last year, when Bankruptcy Judge Meredith Jury ruled that San Bernardino was entitled to court protection. San Bernardino sought chapter 9 protection from creditors on Aug. 1, 2012, blaming a fiscal emergency brought on by a $46 million budget shortfall. Since filing, the city has fought its employee unions in an effort to cancel their contracts and quit making certain payments to CalPERS.
