Filing for protection under Chapter 9 of the federal bankruptcy code is your easy way out.
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Bondholders maintain that Chapter 9 contains a clear provision for the payment of revenue bonds.
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As more municipalities file Chapter 9, the more these kinds of retirement deals will be broken.
San Bernardino and seven other California cities may also be headed to Chapter 9.
But as Detroit teeters, Chapter 9 might be the only answer for the troubled metropolis.
Judge Bennett sided with the county saying hearing on Chapter 9 eligibility will take place in 30 days.
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Cities have gone insolvent periodically over the decades, and Congress passed Chapter 9 specifically to deal with municipal bankruptcies.
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Central Falls, a mostly minority city 15 minutes north of Providence, filed for Chapter 9 bankruptcy protection in federal court on Monday.
Chapter 9 is a significantly different situation, with much less case law.
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There are some significant differences between Chapter 9, and the Chapter 11 reorganization that General Motors and Chrysler went through.
Tuesday, a U.S. Bankruptcy Court judge ruled that Stockton, California, may move forward with its Chapter 9 bankruptcy, which the city filed last summer.
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The more Chapter 9 filings, the less money Calpers receives, and the more strain on the fictional expected rate of return until the boiler bursts.
During a news conference, Orr twice referred to the possibility of using Chapter 9 bankruptcy as the ultimate tool to set the troubled city to rights.
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Legally, Chapter 9 would put the city into uncharted territory.
After selling off on talk about Chapter 9 reorganizations at state and local government levels and an onslaught of muni mutual fund selling, prices have stabilized along with yields.
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Stockton is the largest city in the nation to file Chapter 9, as the city was encumbered with rising retiree health-care costs, decreasing tax revenues and a high foreclosure rate.
Under current law, while municipalities are permitted the bankruptcy option through Chapter 9 of the U.S. Bankruptcy Code, there is no provision whereby a state can voluntarily opt to put itself into bankruptcy.
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But the Chapter 9 bankruptcy case also is being closely watched nationally for the potential precedent-setting implications: whether federal bankruptcy law trumps the California law that says debts to the state pension fund must be honored.
Attorneys watching the case expect that this first-ever Chapter 9 bankruptcy case questioning state pension obligations will be appealed to decide whether the 10th Amendment giving rights to states is more powerful than federal bankruptcy code.
We will explore the effects of irrelevant information on our decisions (chapter 7), examine why subtle differences in the way a question is framed lead to different solutions (chapter 8), and discuss how the structure of our environment can cause us to veer off track (chapter 9).
Patriot Coal on July 9, 2012 filed for Chapter 11 bankruptcy protection.
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