Largest Ever Municipal Bankruptcy Is Filed as Ala. County Seeks Protection from Creditors
Posted Nov 10, 2011 7:00 AM CST
By Debra Cassens Weiss
Alabama’s Jefferson County has filed for bankruptcy after a tentative deal with creditors crumbled.
The bankruptcy filing by the county that includes Birmingham is the largest ever municipal bankruptcy, report Reuters and the Birmingham News. A press release announcing the filing says county commissioners decided to declare bankruptcy because creditors balked at economic concessions outlined in a September deal.
The county is facing $4.23 billion in debt, according to the Birmingham News. The largest creditor, JPMorgan Chase & Co., owns about $1 billion of the county's $3.14 billion in sewer construction bonds. Reuters says the sewer bonds had soured in the mid-2000s amid corruption that led to bribery and fraud charges.
ABA Journal: “The Next Chapter: Municipalities Are Using Chapter 9 to Fend Off Creditors”