The biggest municipal bankruptcy in the history of USA has struck Alabama’s most highly populated County, the result of which can leave the people paying high taxes for the public services.
The full impact on its 658,000 resident’s won’t be clear until after a judge approves the move at a hearing next month and local officials negotiate a plan with creditors for adjusting its debts. The county has filed for bankruptcy protection and Federal Judge Thomas Bennett in Birmingham set a December 15 deadline on Thursday for a hearing on whether the county is eligible to file for Chapter 9, the section of the U.S. Bankruptcy Code that covers municipal bankruptcies.
Kenneth Klee, a bankruptcy expert whose law firm, Klee, Tuchin, Bogdanoff & Stern LLP, is representing the county said “It’s critical to the reorganization efforts of Jefferson County that the bankruptcy court keeps the automatic stay in place and affirms the county’s rights to set rates, gain control of the sewer revenues and control of the sewer system. This is a critically important hearing that will come on very early in the Chapter 9 case.”
Jefferson County’s debt escalated in the mid-2000s when bond issuance deals to upgrade its sewer system soured amid widespread corruption, bribery and fraud charges that led to some 22 convictions, which included elected officials and government workers.
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