Bankruptcy Judge Thomas Bennett yesterday cleared the way for Wall Street banks and others owed $4.2 billion by Alabama’s Jefferson County to vote on a plan to end the second-largest U.S. municipal bankruptcy, Reuters reported yesterday. Creditors must vote by an Oct. 7 deadline, as the official exit from the bankruptcy will pave the way to a year-end bond sale of about $1.9 billion that is needed to pay off current sewer debt bondholders at sizable discounts. A large majority of Jefferson County’s creditors have already agreed to the negotiated plan, which promises to deliver only $1.835 billion of the 3.078 billion owed to sewer-system warrant holders, with bondholder losses on a scale not seen since the 1930s. The county has also struck deals covering defaulted school warrants and other non-sewer debt.
