09 Apr San Bernardino Bankruptcy
San Bernardino California has filed for bankruptcy protection under chapter 9 of the bankruptcy code. The primary reason a municipality would file for bankruptcy protection is they can no longer afford to pay their bondholders and pension obligations. In this case it looks like the City is looking to reduce those obligations substantially. It also looks like it may be quite a fight between the bondholders and the pension fund to determine who gets the biggest share of the money in a reorganization plan. Municipal bankruptcy proceedings under chapter 9 of the bankruptcy code are rare, but seem to happen when a city loses most of its tax base due the housing market collapse. It will be interesting to see who gets what out of this bankruptcy plan.
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