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The federal judge overseeing the bankruptcy of the city of San Bernardino, California, moved yesterday to end disputes over the disclosure of financial information and begin resolving the initial issues in the case by late summer, Reuters reported yesterday. Bankruptcy Judge Meredith Jury set two key hearing dates—July 17 and August 28—which she hopes will force the parties to narrow disputes. She also invited the city to apply for a quick judgment on the disputed issues in the Aug. 28 hearing, and could potentially rule at that time on whether San Bernardino is eligible for chapter 9 bankruptcy protection.

The breakdown in Detroit's infrastructure is a major reason why the self-insured city is sued more than 700 times a year and has to pay out roughly $26 million to plaintiffs, according to a Reuters analysis yesterday. A significant portion of the legal tab—about $22 million a year—has resulted from settlements, budget records show. The settlements are negotiated by city lawyers, but ultimately must be approved by the city council. Now Detroit's emergency manager, Kevyn Orr, an attorney appointed to turn around the city's troubled finances, is seeking to break the pattern. To put an end to the relatively easy money for plaintiffs, Orr in late May rejected a handful of settlements that Detroit's city council had recently approved. Orr's intervention is aimed at reducing the number of settlements, particularly in cases deemed to be without merit.

Alabama's bankrupt Jefferson County aims to sell $1.89 billion of municipal debt in late 2013 as part of a bankruptcy-exit plan that will hand historic losses to Wall Street banks and other investors, Reuters reported today. "The buying should start December 2013," said Kenneth Klee, a bankruptcy lawyer for the county. "A lot of people out there have money to invest and Jefferson County is going forward with a plan," Klee said of the offerings that were part of a tentative deal reached Tuesday by the county and creditors JPMorgan Chase, hedge funds and bond insurers. Under the deal, which will be part of a reorganization plan that must be okayed by a federal judge and in a vote by creditors, the county is refinancing the $1.89 billion that will be paid back to creditors in America's largest municipal bankruptcy to date.

The Detroit Institute of the Arts' collection, estimated to exceed $15 billion in value, could soon be sold off at auction to the highest bidder, Bloomberg News reported yesterday. Detroit was taken over by the State of Michigan in March but has yet to declare bankruptcy in court. If the city declares bankruptcy, the state-appointed emergency manager, Kevyn Orr, can sell off its assets to repay creditors—and artworks housed in the 128-year-old museum are not exempt. The city’s debt about equals the worth of the museum’s holdings. Orr touched off a storm of criticism in the art world last week, when he asked the museum to give him an appraisal of its collection. Orr says that he has no immediate plans to auction off the valuable works of art. Meanwhile, the museum is gearing up for a legal battle. Though the Detroit Institute of the Arts is owned by the city, museum officials are arguing that the art itself is held in a “public trust” and therefore can’t be sold. Michigan Senate Majority Leader Randy Richardville recently introduced a bill that would protect the museum’s collection from being sold off during bankruptcy proceedings.

A former finance chief for the bankrupt city of San Bernardino said that crimes may have been committed with respect to the city's use of funds, according to court papers filed yesterday by the city's biggest creditor, Reuters reported yesterday. San Bernardino and its creditors are preparing for another court hearing today in the city's quest to be declared eligible for federal bankruptcy protection. CalPERS, the giant state pension fund and the city's biggest creditor, filed a pre-hearing document signaling that it was losing patience with the city's pleas of poverty. "New facts have come to light," raising questions about the city's good faith efforts to achieve bankruptcy protection, CalPERS said in the filing citing a May 10, 2013 deposition that is not yet part of the public record. In its papers to the court, CalPERS cited the deposition of Michael Busch, the financial consultant hired by the city to run its bankruptcy application. According CalPERS' court papers, Busch said in his deposition that Jason Simpson, San Bernardino's most recent finance chief, "expressed his concern that crimes had occurred with respect to the city's use of certain funds."

Creditors holding most of the massive sewer debt that bankrupted Alabama's Jefferson County have agreed to deals that could help end the largest U.S. municipal bankruptcy, with JPMorgan Chase & Co. agreeing to a $842 million "haircut," Reuters reported yesterday. The deals, approved yesterday by county commissioners, appear to clear a path for the county to win acceptance by a federal judge of a workout plan to resolve the landmark $4.2 billion bankruptcy, filed in November 2011. If implemented, the workout and the deals would impose the largest losses on municipal bondholders by a big U.S. local government since the 1930s. JPMorgan, a big holder of the county's $3.1 billion of sewer warrants, agreed to give up about $842 million of the $1.218 billion of sewer debt it holds, according to a county document.

Jefferson County, Ala., could take a major step this week toward ending it historic bankruptcy by announcing deals with some creditors who hold $3.14 billion in sewer system debt, the Birmingham News reported yesterday. The Jefferson County Commission has a closed door meeting scheduled today with lawyers to discuss planned support agreements with sewer creditors. On Wednesday, the county has a status conference scheduled with Chief U.S. Bankruptcy Judge Thomas Bennett to offer more details on its bankruptcy exit plans. The agreements grew out of a series of meetings between county officials and creditors held last month.

Fresno and Hercules residents will vote on June 4 on ballot measures that indicate how far some of California's ailing municipalities must go to fix their shaky finances, Reuters reported on Friday. In Fresno, a city of 500,000 in the state's Central Valley, Mayor Ashley Swearengin is seeking support for a measure to privatize residential garbage collection. The plan would save money by eliminating about 120 city jobs and raise at least $14 million in fees over several years from a private garbage contractor. On the same day, Hercules, a city of 24,000 in the San Francisco Bay area, will vote for the second time in two years on a tax increase, this time a rise in utility service charges. If the measure fails, the city says, it may have to shut down the police department and contract with the county sheriff for law enforcement.

State Treasurer Andy Dillon said that he believes Detroit’s turnaround is building momentum and the city will be in better shape once emergency manager Kevyn Orr completes his tenure, the Detroit Free Press reported today. But it is clear that a municipal bankruptcy is possible, and Dillon said that if it happens, it must be well-planned to avoid pitfalls that have left cities such as Stockton and Vallejo, Calif., struggling to provide services despite chapter 9 filings. Acknowledging the public uproar over the vulnerability of the Detroit Institute of Arts’ assets in a possible Detroit bankruptcy, the aim, he said, would be to ensure that a Detroit bankruptcy “is not a failed transaction,” Dillon said.

Museum officials here said Friday that they strongly opposed any forced art sales, after the powerful emergency manager of the city indicated that its prized holdings could be sold to pay off creditors in the event of a bankruptcy filing, Dow Jones Daily Bankruptcy Review reported yesterday. While the Detroit Institute of Arts doesn't dispute the city owns many valuable works, including works by Diego Rivera and Vincent van Gogh, museum officials argued a sale was prohibited because the collection is held in "public trust."