In Re City of Stockton
Published: Jul. 6, 2013 | Result Date: Jun. 12, 2013 | Filing Date: Jan. 1, 1900 |Case number: 2:12-bk-32118 Settlement – $5,100,000
Court
U.S. Bankruptcy
Attorneys
Debtor
Norman C. Hile
(Orrick, Herrington & Sutcliffe LLP)
Creditor
Jason E. Rios
(Felderstein, Fitzgerald & Willoughby)
Facts
The City of Stockton is the largest city to have filed for chapter 9 relief. Retiree health benefit claims against the City are held by over 1,100 persons. Such claims exceed $300 million, and could be as much as $600 million, depending on actuarial assumptions. At the outset of the City's chapter 9 case, and prior to the appointment of the Official Committee by the U.S. Trustee, an organization of Stockton retirees sought a temporary restraining order prohibiting the City from reducing or eliminating health benefits. The bankruptcy court (Klein, J.) denied the TRO and dismissed the complaint, concluding that it lacked the authority to dictate to the City how to allocate its resources.
Result
Recently, the City and the Committee agreed that the Committee would support and would recommend that retirees vote in favor of a plan of adjustment that pays $5.1 million in the aggregate to the holders of health benefit claims in full satisfaction of such claims and that does not propose any impairment of pension and other existing retirement benefits.
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