The judge overseeing the $4.23 billion bankruptcy case of Alabama's Jefferson County on Wednesday ordered creditors to take a second run at forming a panel to represent low-priority creditors in expected workout negotiations, Reuters reported yesterday. Bankruptcy Judge Thomas Bennett ruled that two of the three currently proposed members of an unsecured creditors committee were ineligible because their claims against Jefferson County were of a different category. Jefferson County, which is home to Birmingham, filed the biggest U.S. municipal bankruptcy on Nov. 9 after a tentative workout, mainly with Wall Street creditors, unwound and scuttled concessions that may have been worth $1 billion to the cash-starved county. One of the ineligible creditors, the UAB Health System, may also have a possible conflict of interest since it has been billed by the county's sewer system for $1 million in unpaid sewer fees, Judge Bennett said.
