Ruling in Stockton Bankruptcy Case Could Affect San Bernardino’s Case

October 1, 2014 – In The News
San Bernardino County Sun

Michael A. Sweet was quoted in the San Bernardino County Sun article, “Ruling in Stockton Bankruptcy Case Could Affect San Bernardino’s Case.” Full text can be found in the October 1, 2014, issue, but a synopsis is below.

A decision by the judge in Stockton’s bankruptcy trial that allows bankrupt cities to treat the California Public Employees’ Retirement system (CalPERS) like other debtors could help open the door for insolvent cities looking to cut back on pension obligations, including San Bernardino.

The judge in San Bernardino’s bankruptcy case said she considers comparable cases and has referenced Stockton’s case before.

“It’s persuasive but not precedential,” said Michael Sweet, referring to the Stockton decision, “but having paid close attention to what Judge Jury has done in the San Bernardino case, it’s clear that she is well aware of what’s happening in the Stockton case.”

Unlike Stockton, San Bernardino stopped paying the employer portion of CalPERs obligations when the city filed for bankruptcy, signaling its willingness to fight the pension system, Sweet said.

“San Bernardino was sending a message that it was willing to impair CalPERS,” he said. “If Judge Klein and Judge Jury are of a similar mind, which I get a sense that they are, does this empower San Bernardino to put forward a plan of adjustment that impairs CalPERS?”