Thursday, November 10, 2011

Alabama's Jefferson County Declares The Biggest Municipal Bankruptcy in US History

I fear it is not a title they will hold for long...

"From corrupt and incompetent local officials to Wall Street's credit crisis and toxic bonds, there was plenty of blame to go around on Thursday, a day after Alabama's Jefferson County declared the biggest municipal bankruptcy in U.S. history.

The county, once a leading industrial hub in the U.S. Deep South, filed for bankruptcy court protection after failing to reach final agreement on terms of a preliminary deal with creditors led by JPMorgan Chase & Co in September to settle $3.14 billion in sewer-system debt.

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.

The head of the Jefferson County Commission, which voted 4-1 for bankruptcy, pointed to a $140 million decline in the savings expected from the preliminary deal as the trigger for the filing.

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