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A turnaround team tasked with reviving Atlantic City says New Jersey's struggling gambling hub must consider cost cuts, layoffs and longer bond maturities, but bankruptcy is not yet an option to explore, Reuters reported yesterday. "Bankruptcy is not something that we are contemplating," said emergency manager Kevin Lavin yesterday. "We think that this process can be done without that necessity." Atlantic City's tax base has been gutted, to just $7.35 billion in 2015 from $20.5 billion in 2010, as its casinos suffered from competition in neighboring states. Lavin's report, which comes about 60 days after his appointment by Governor Chris Christie, describes a city in acute distress. Many had feared his team, which has ties to the professionals that oversaw Detroit's municipal bankruptcy, would prioritize bondholder losses and bankruptcy. Instead, Lavin's report proposes a mediator to negotiate with stakeholders, including labor unions and casinos. Lavin's first priority is closing the city's projected budget deficit of $101 million. Without significant change, the cumulative deficit will be $393 million over five years, the report said.

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.

San Bernardino has defaulted on nearly $10 million in payments on its privately placed pension bond debt since it filed for bankruptcy in 2012, Reuters reported yesterday. In addition, the southern California city has not negotiated with its bondholders since September. The missed payments illustrate the trend among cities in bankruptcy to favor payments to pension funds over bondholder obligations, which has increased the hostility between creditors and municipalities. San Bernardino declared last year that it intends under its bankruptcy-exit plan to fully pay CalPERS, its biggest creditor and America's largest public pension fund with assets of $300 billion. The city continues to pay its monthly dues to CalPERS in full, but has paid nothing to its bondholders for nearly three years, according to the interest payment schedule on roughly $50 million of pension obligation bonds issued by San Bernardino in 2005. The non-payment of the bond debt and the city's lack of interest in talks with its pension bondholders just weeks before it must produce a bankruptcy-exit plan should serve as a wake-up call to Wall Street issuers of debt to struggling cities. San Bernardino's bankruptcy is being closely watched by the $3.6 trillion U.S. municipal bond market.

Jefferson County's bankruptcy may have ended in late 2013 but lawyers that represented the county in the case are still collecting millions of dollars in fees, according to AL.com. Three firms have collected nearly $7.6 million in payments in the 14 months since the county emerged from bankruptcy, according to records. They are Bradley Arant Boult & Cummings which has billed $4.1 million; Klee Tuchin Bogdanoff and Stern, $1.9 million; and Balch & Bingham, $1.5 million. Jefferson County Attorney Carol Sue Nelson said those firms have handled legal work other than the bankruptcy such as audit reports and tax litigation, but acknowledged that "post-bankruptcy" matters are still costing the county.