A U.S. judge in July could take up the issue of whether a bankrupt city can shield workers' pensions while inflicting heavy losses on bond holders and other creditors, a lawyer for California's pension fund for public employees said on Friday, Reuters reported. Since filing for bankruptcy last year, the California city of Stockton has made a point of maintaining payments to the California Public Employees' Retirement System (CalPERS) while targeting creditors for steep losses. Whether Stockton may press on with that approach could be taken up in coming weeks by Bankruptcy Judge Christopher Klein, who did not take up the matter during a three-day trial last month on Stockton's eligibility for bankruptcy. Instead, he ruled the city of about 300,000 established it is eligible to proceed with its bankruptcy case and craft a so-called plan of adjustment for its debts. But Judge Klein at the same time signaled the closely watched role of CalPERS in Stockton's bankruptcy case could come into focus when the plan of adjustment emerges.
