Two creditors have formally challenged the bankrupt city of San Bernardino’s (Calif.) plan to repay its debts to CalPERS, setting up another big court fight over pension plans and whether cash-strapped governments can keep their promises to retirees, the Sacramento Bee reported today. The challenge comes two months after San Bernardino officials said they would pay the city’s $24 million-a-year CalPERS bill in full, ending two years of suspense. The city also revealed it had begun repaying millions of dollars in past-due obligations to CalPERS, debts that arose when San Bernardino halted payments to the pension fund for several months after filing for bankruptcy in 2012. Ambac Assurance Corp., a New York bond insurer, and EEPK, a Luxembourg bank, sued the city on Wednesday in U.S. Bankruptcy Court in Riverside, Calif. Their complaint: San Bernardino shouldn’t be paying its CalPERS debt when it hasn’t paid them on debts totaling more than $59 million.
