Municipal Bankruptcy

Use of Chapter 9 Municipal Bankruptcy (by Number, Type and Year)


Use of Chapter 9 Municipal Bankruptcy (by Number, Type and Year) ( Depositphoto_-Legal-Pillars–-©-slickspics.jpg )

By James Spiotto

  1. Historically the use of bankruptcy by a municipality has been rare and a last resort:
    • Since 1954, virtually all of those municipalities that filed Chapter 9 were small or not major issuers of Bond Debt except for Bridgeport, CT in 1991, Orange County in 1994, Vallejo, CA in 2008, Jefferson County, AL in 2011, Stockton and San Bernardino, CA in 2012 and Detroit in 2013. Both Harrisburg, PA and Boise County, ID. were dismissed as was Bridgeport in 1991.
    • Of the 293 Chapter 9 filings since 1980 and of the 318 filings since 1954, 175 (184 since 1954) have been municipal utilities and special districts and only 53 (63 since 1954) have been cities, counties, towns and villages. The remaining 52 have been hospitals or healthcare, 8 transportation and 6 school or educational facilities. Less than 70% of the Chapter 9 filings resulted in a confirmed plan of debt adjustment.
  2. No Tsunami of Chapter 9 filings in 2012, 2013 and 2014:
    • Only 13 Chapter 9 filings in 2011, 12 in 2012, 8 in 2013, 10 in 2014 and 1 so far in 2015.
    • Only 4 cities, towns, counties or villages have filed Chapter 9 (municipal bankruptcy) in 2011, namely Jefferson County, Central Falls, Boise County and Harrisburg, PA (Boise County and Harrisburg were dismissed), 3 in 2012, namely Stockton, San Bernardino and Mammoth Lakes (which was dismissed that year) and only 1 in July, 2013 – namely Detroit and none since Detroit in 2013 and 2014 and so far in 2015.
    • Total Chapter 9 filings since 1937 – 661.
    • Still RARE and mainly small special tax districts, municipal utilities.
    • In the last 60 years, only 63 cities, towns, counties and villages have filed out of 318 Chapter 9 filings that have been made. Twenty-eight of the 63 (44%) were Chapter 9 cases dismissed before any plan of debt adjustment was confirmed purportedly the city, town, village or county finding a better resolution or was not authorized to file under state laws.
  3. The largest cities, towns, villages and counties to have filed Chapter 9 bankruptcy in the last 60 years (including Detroit):
  Approximate
Population
Approximate
Debt in Millions
Orange County (filed 1994) 3,000,000 $1,974
Vallejo, California (filed 2008) 115,942 $175
(2008)
Jefferson County (filed 2011) 658,931
(2011)
$4,200
Stockton, California (filed 2012) 291,707
(2010)
$1,032
(2011)
San Bernardino (filed 2012) 213,012
(2011)
$492.3
(2011)
Detroit, Michigan (filed 2013) 701,475
(2012)
$18,500
(2013)

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