Bankrupt California City Provides Cautionary TaleJuly 7, 2012 – In The News
Michael A. Sweet, a partner and member of the firm’s Financial Restructuring and Bankruptcy Department in San Francisco, recently spoke to Agence France-Presse (AFP) about the city of Stockton, California’s bankruptcy. On June 29th, the city became the largest US city to ever file for bankruptcy. Many believe that this move will hurt city employees with health benefits and pensions.
Sweet told AFP that the Stockton case could break new legal ground in addressing whether cities can use bankruptcy to break unaffordable promises regarding retiree health benefits and pensions -- expenses that are crushing many local economies.
"That's going to be the big issue," Sweet said. "Those are huge strains on the city budget."
This article also appeared in Yahoo! News.