Chief Bankruptcy Judge Christopher Klein ruled yesterday that Stockton, Calif., does not need court approval to settle a $55,000 claim, a plan contested by capital market creditors and backed by the state's pension fund, Reuters reported yesterday. Judge Klein said that chapter 9 of the Bankruptcy Code does not allow courts to tell cities seeking protection from their creditors how to use their property and revenues. Judge Klein also said that Stockton maintains financial independence, which includes opting to pay to settle a claim against its police department, a blow to creditors seeking his help to influence the broke city's financial choices.
Judge Klein was a panelist recently on an ABI teleconference examining chapter 9 trends and municipal financial distress. To listen to the teleconference, please click here.