By Gary Lloyd
Jefferson County on Sunday filed its plan to trim its multi-billion-dollar debt so it can exit the largest governmental bankruptcy in United States history by the end of 2013.
According to a statement from Jefferson County Commission President David Carrington, the plan of adjustment eliminates more than $1.2 billion of sewer debt and saves the citizens millions of dollars in general obligation and school warrant debt.
The plan is largely consensual and was negotiated in good faith with a broad range of sewer, general obligation and school warrant creditors. The plan consists of numerous settlements, compromises and concessions. All the various sewer creditors (the monoline insurance companies, the liquidity banks, the hedge funds and particularly JPMorgan) will be getting “far less” than a full recovery.
Under the plan, more than 10 different pieces of litigation pending in at least six different courts will be resolved with finality. Without the plan, all this litigation (and many other potential pieces of litigation) could drag on for years, cost the citizens of Jefferson County millions of additional dollars in legal fees, and carry great uncertainty and risk about the ultimate result, Carrington said.
The plan achieves the fundamental bankruptcy purpose of giving Jefferson County a “fresh start” – allowing the county to put “the sins of the past” behind so that the commissioners can shift our focus to creating a brighter future for the county’s children and grandchildren, Carrington said.
Chief U.S. Bankruptcy Judge Thomas Bennett will hold a hearing Aug. 6 to determine whether he will approve the disclosure statement.
“Once approved, it will be circulated to creditors who will vote whether to accept or reject the plan, prior to a confirmation hearing on the plan in November,” Carrington said in a statement. “All interested parties, including members of the public, have open access to the plan and will have months to evaluate it. All parties in interest will have a full and fair opportunity to present any objections to the plan and have their positions considered by the Bankruptcy Court.”
Carrington said he believes the plan is “fair, equitable, lawful, appropriate and in the best interests of the county, its citizens and the creditors.”
The plan and disclosure statement are available at http://www.jeffersoncountyrestructuring.com by selecting “Chapter 9 Plan & Related Documents.”
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