Key Test Looms for Stockton, California, Bankruptcy BidFebruary 25, 2013 – In The News
The city of Stockton, California, has a strong case heading into court next week in a bid to establish eligibility for bankruptcy protection, a move contested by bond insurers of more than $350 million of its debt, lawyers watching the case predicted.
Michael Sweet of the firm who helped Richmond, California, avoid filing for bankruptcy, said Stockton has an upper hand because of its orderly approach to California's and the federal Chapter 9 municipal bankruptcy codes.
"The way this case appears to be going, Stockton should be able to convince Judge Klein it's eligible," Sweet said.
Hard times set in for Stockton when its revenue plunged after its once red-hot housing market went bust. Two decades of generous employee benefits, too much debt and poor fiscal management also caught up with the city located 85 miles east of San Francisco.