To shed more than $1.4 billion in debt, Jefferson County, Alabama agreed to give up some of its power to set future sewer rates, a compromise that means the second-biggest U.S. municipal bankruptcy might be brought back to life decades from now, Bloomberg News reported yesterday. Bankruptcy Judge Thomas Bennett yesterday approved the county’s debt-adjustment plan, which was built on a settlement with JPMorgan Chase & Co. and other creditors. That deal requires the bankruptcy court to retain authority over the county until $1.84 billion in new sewer debt is paid off in 40 years. The unusual agreement will allow a trustee for warrant holders to seek authority, after the bankruptcy case becomes inactive, to force any sewer rate increases that may be needed to pay the debt. After Judge Bennett issues a written ruling, the county can close on $1.84 billion in new financing on Dec. 3 that will be used to pay creditors. With the closing, the active part of the case will end, leaving only minor legal issues to be addressed, said Patrick Darby, an attorney for the county.
