The holdout creditor in Stockton, Calif.’s bankruptcy case filed its opening brief in an appeal of the city's reorganization plan yesterday, claiming that "no bondholder has ever received so little in the history of municipal bankruptcy,” Reuters reported yesterday. The creditor, two funds managed by Franklin Templeton Investments, said that Stockton's plan to exit chapter 9 bankruptcy was discriminatory and punitive. Franklin said that it would receive less than 1 percent of its $30.5 million unsecured claim in the case, now before the U.S. Bankruptcy Appellate Panel of the Ninth Circuit. The brief claimed that by confirming a plan providing such a small distribution, compared with recoveries of 52 percent to 100 percent for other unsecured claims, U.S. Bankruptcy Judge Christopher Klein erred in backing Stockton's exit plan. Suffering a steep decline in revenue, Stockton filed for bankruptcy protection from its creditors in 2012. The Northern California city of about 300,000 residents received approval from Judge Klein to exit chapter 9 last fall over objections by Franklin's legal team.
