A U.S. court on Friday dismissed an appeal filed by a holdout creditor over the plan that enabled the city of Stockton, Calif., to exit bankruptcy, Reuters reported on Friday. Stockton's holdout creditor, two funds managed by Franklin Templeton, filed the appeal earlier this year after the city had received the green light to exit chapter 9. But an appellate panel of the U.S. Ninth Circuit Bankruptcy Court dismissed the case as equitably moot, saying that the bankruptcy court had not clearly erred in its decision. Franklin had argued that "no bondholder has ever received so little in the history of municipal bankruptcy." Franklin California High Yield Municipal Fund and Franklin High Yield Tax-Free Income Fund loaned $35 million to Stockton in 2009. After the bankruptcy, Franklin ended up with over $6 million. The city contended that it was not "awash in loose cash" and could not boost Franklin's payments without "eroding the underpinnings of the plan."
