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Victor H. Gotbaum, a shrewd and combative Brooklyn native who headed the nation’s largest municipal employees’ union for two decades and played a pivotal role in saving New York City from bankruptcy in 1975, died on Sunday, the New York Times reported yesterday. As executive director of District Council 37 in New York, Mr. Gotbaum was one of the nation’s most prominent union leaders during a tumultuous time in the history of organized labor. To many in New York, he was simply Mr. Labor, especially in 1975, when he clashed and then compromised with bankers, state officials and Mayor Abraham D. Beame in an effort to keep the city afloat. That year, New York came perilously close to defaulting on its debt when several big banks threatened to close off credit unless Mayor Beame took draconian steps to cut the budget. The mayor soon called for eliminating 38,000 city jobs and denying municipal workers a planned 6 percent raise.

A bill that would permit Nevada cities and counties to file for chapter 9 protection was endorsed on Friday by North Las Vegas Mayor John Lee, the Las Vegas Review Journal reported yesterday. Nevada Senate Bill 475, which was heard by the Nevada Senate Government Affairs Committee, would allow the bankruptcy if the state Tax Commission found that a severe financial emergency existed and was expected to last at least three years. It would also require such a bankruptcy petition to be reviewed and approved by the governor and attorney general before it could be filed. Efforts would be made to avoid a bankruptcy filing, which would only be a last resort. The committee did not take action on the measure.

Atlantic City’s fiscal crisis may prompt New Jersey to depart from its historic practice of supporting local-government finances as the gambling hub heads down a path similar to Detroit’s, Bloomberg News reported yesterday. An emergency-management team hired by Governor Chris Christie that includes Kevyn Orr, who guided Detroit’s record bankruptcy, is considering deferring bond payments to help fix the seaside city’s finances, according to a March 23 report. Asking bondholders to accept less than they’re owed would undermine New Jersey’s reputation for nurturing distressed cities, said Ted Molin, a senior credit analyst at Wilmington Trust Co. in Delaware. The last time a municipality in the state defaulted was during the Great Depression, according to its Department of Community Affairs. Any debt losses in the city of about 40,000 would probably cause borrowing costs to rise for fiscally strained New Jersey cities, said Matt Fabian, a partner at Concord, Mass.-based research firm Municipal Market Analytics. “For cities with even a chance of distress, you have to assume the state would pursue bondholder losses,” Fabian said.

General Electric would commit to financing a new natural gas plant in Puerto Rico under a debt restructuring plan proposed by creditors of the island's struggling power utility, Reuters reported today. The plan, which also includes creation of more than 3,400 new jobs, comes during ongoing negotiations between the Puerto Rico Electric Power Authority (PREPA) and its creditors to restructure the utility's $9 billion in debt. An ad hoc group of PREPA creditors, including OppenheimerFunds and Franklin Templeton, on Saturday offered $2 billion to finance a turnaround at PREPA, $1.2 billion of which would fund a new natural gas facility. While it remains to be seen if PREPA will accept the proposal, new financing could stave off a messy default that would reverberate around the U.S. municipal bond market, and allow the utility to modernize its business, a key element in fixing Puerto Rico's ailing economy.

Puerto Rico’s Electric Power Authority, the island’s main supplier of electricity, won an agreement with its creditors to extend negotiations for 15 days over what could be the largest-ever U.S. municipal-debt restructuring, Bloomberg News reported yesterday. Prolonging the discussions allows the junk-rated utility to bargain with banks, bondholders and insurance companies beyond the original deadline scheduled by today, according to a statement yesterday by the power authority. The agency, known as Prepa, signed an agreement in August with its creditors that delayed repayment of $696 million of bank loans through March. “All parties believe advances have been made and there is merit to continue conversations with our creditors to find feasible solutions that will transform Prepa into a modern and sustainable utility,” said Lisa Donahue, the utility’s chief restructuring officer.

Stressed by pension debt, other financial issues and the possibility losing a chunk of their state aid, some Illinois cities want the option to file for bankruptcy, the Associated Press reported yesterday. They've found an ally in Illinois Rep. Ron Sandack (R), who's proposed legislation to allow municipalities to follow in the footsteps of Detroit and other cities in restructuring debt and paying back creditors. Opponents, however, say there are less drastic, intermediate steps than the "dangerous" path of bankruptcy. Twelve states authorize cities to file chapter 9 bankruptcy filings, according to the National Conference of State Legislatures, and another 12 grant conditional ability to file. Twenty-six states either don't have chapter 9 authorization or prohibit it. Sandack is sponsoring legislation in Illinois that would grant authority for communities to file for bankruptcy under chapter 9 of the federal code. He said that it's a "measure of last resort," especially with Gov. Bruce Rauner's proposal in next year's budget to cut in half the local governments' share of state income taxes by 50 percent. "It's just giving time and space to do things right," Sandack said.

Atlantic City, New Jersey's struggling gambling hub, will get a 60-day extension of a $40 million state loan that was due today, Reuters reported yesterday. A report last week by its state-appointed emergency manager, Kevin Lavin, called for cost-cutting, layoffs and possibly debt restructuring to stabilize the city's budget, which has a projected $101 million deficit. The report also said that without significant state support, the oceanfront resort town "cannot stand on its own." With increased competition from neighboring states, Atlantic City no longer has a monopoly on East Coast casinos. As a result, it lost nearly two-thirds of its property tax base in just five years. It is now down to $7.35 billion. Even with the loan extension, Atlantic City's cash flow is expected to go negative by May, according to Lavin's report. Several state lawmakers are working on a package of legislation aimed at stabilizing Atlantic City's tax base by having casinos make set payments in lieu of taxes.

The bankrupt California city of San Bernardino revealed on Thursday details of its deal with the California Public Employees' Retirement System (CalPERS), in which the retirement fund will be paid in full under the city's bankruptcy exit plan, Reuters reported yesterday. San Bernardino announced last year it intended to pay CalPERS in full under its bankruptcy plan, while cutting its bondholder debt. But it had not before revealed details of the deal with CalPERS, America's largest public pension fund with assets of $300 billion. San Bernardino, a city of 205,000 located 65 miles east of Los Angeles, declared bankruptcy in August 2012 with a $45 million deficit. San Bernardino was recently ordered by the federal bankruptcy judge overseeing the case to make public the CalPERS deal, and the city published the details before a court hearing in the case yesterday. The CalPERS deal has angered other creditors, including holders of $50 million in pension obligation bonds, who face cuts to their debt. They are suing the city over the CalPERS deal.

A Michigan state House committee is recommending Detroit get a $4.1 million cut in state revenue sharing three months after the city emerged from the largest municipal bankruptcy in U.S. history, the Detroit News reported today. The Michigan House Appropriations General Government Subcommittee approved a $4.6 billion spending plan yesterday that changes a formula for municipal revenue sharing and only reduces state funding for Detroit. The panel’s change redirects $5.8 million that Gov. Rick Snyder budgeted for Detroit and spreads it out across 101 cities, villages and townships across the state. The redistribution of revenue sharing reduces Detroit’s current state funding by $4.1 million from $195.7 million this fiscal year to $191.6 million, according to the nonpartisan House Fiscal Agency. State Rep. Laura Cox, chairwoman of the subcommittee, said Detroit can “take a little bit of a haircut” after shedding $5.5 billion in pension and retiree health care liabilities in bankruptcy court.

Puerto Rico's indebted electric power authority PREPA will seek to persuade creditors in a meeting today to give it more time to restructure its business, Reuters reported today. At a meeting in New York, PREPA will argue that creditors, who hold over $9 billion of its debt, should extend a forbearance agreement that expires on March 31. Once the agreement expires creditors have the right to accelerate their claims, potentially forcing the utility into insolvency. The creditor group represents 60 percent of PREPA's bondholders and includes large hedge funds such as Blue Mountain Capital and Appaloosa Management, mutual funds Oppenheimer and Franklin Templeton, bond insurers, as well as Citibank and Scotiabank. PREPA missed a deadline on March 2 when it was supposed to present bondholders with a comprehensive restructuring plan. Earlier PREPA told creditors restructuring would likely take 10 years instead of an expected five years. The creditors did not take action when that milestone was missed.