A lawyer for the creditors' trustee in America's biggest municipal bankruptcy on Friday said that the trustee would not make a Feb. 1 payment to owners of $3.14 billion of sewer debt issued by Alabama's Jefferson County, Reuters reported on Friday. Gerald Mace, an attorney for creditors' trustee Bank of New York Mellon, told a bankruptcy court hearing that the distribution could not be made because of a "lack of funds." In a document filed on the Electronic Municipal Market Access on Friday, BNY Mellon lists as outstanding approximately $3.1 billion in principal of sewer revenue warrants affected. The notice explains that "certain holders of bank warrants are not willing, at this time, to consent the trustee making distributions of principal with respect to Sewer Warrants coming due at maturity or resulting of mandatory sinking fund redemption in February and early March 2013." The county continues to make payments from sewer-system revenues to Bank of New York, which distributes the money to debt owners that include Wall Street banks, insurance companies and hedge funds, Jefferson County Manager Tony Petelos said.
