On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

1440 AM Green Bay, WI

Weather

Current Conditions(Green Bay,WI 54303)

More Weather »
41° Feels Like: 33°
Wind: W 14 mph Past 24 hrs - Precip: 0.11”
Current Radar for Zip

Tonight

Showers 39°

Tomorrow

AM Clouds/PM Sun 63°

Sat Night

Mostly Clear 34°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Judge OKs vote on Alabama county's bankruptcy plan

By Melinda Dickinson

BIRMINGHAM, Alabama (Reuters) - A U.S. judge on Tuesday cleared the way for Wall Street banks and others owed $4.2 billion by Alabama's Jefferson County to vote on a plan to end the second-largest U.S. municipal bankruptcy.

Creditors must vote by an October 7 deadline, as the official exit from the bankruptcy will pave the way to a year-end bond sale of about $1.9 billion that is needed to pay off current sewer debt bondholders at sizable discounts.

Eclipsed only by Detroit, when the city filed on July 18 for municipal bankruptcy with more than $18 billion in liabilities, Jefferson County had sought protection from creditors in November 2011, stung by overwhelming sewer debt and diminished revenues.

A large majority of Jefferson County's creditors have already agreed to the negotiated plan, which promises to deliver only $1.835 billion to sewer-system warrant holders owed $3.078 billion, with bondholder losses on a scale not seen since the 1930s. The county has also struck deals covering defaulted school warrants and other non-sewer debt.

On Tuesday, after hearing arguments by lawyers representing sewer-system customers that disclosures were inadequate, U.S. Bankruptcy Judge Thomas Bennett approved the massive disclosure plan and set the stage for votes by creditors. If approved by creditors, the plan must still be confirmed at a hearing expected to be held on November 12.

"Ballots go out before the end of this month," Kenneth Klee, the county's lead bankruptcy attorney, told reporters. "We will not know the final count until October."

Klee has repeatedly urged quick approval of the workout plan to pave the way to the bond sale, and he cautioned that rising interest rates might scuttle the planned refunding offering.

"If interest rates go past a certain point, the county and creditors will come back to the table, and the county will have to ask for concessions," Klee said.

Market fears that the Federal Reserve could soon unwind its expansionist monetary policy have pushed yields in the $3.7 trillion U.S. municipal bond market higher. The 30-year yield on top-rated bonds has risen by nearly 150 basis points since the start of the year, closing on Tuesday at 4.28 percent, according to Municipal Market Data.

David Carrington, president of the Jefferson County Commission and a negotiator during the bankruptcy talks, said Bennett's ruling was "another positive step toward the county's goal of exiting bankruptcy before the end of the year."

Bennett's approval will also allow work to begin on offering documents for the county's planned bond sales, according to Klee. Jefferson County is expected to pay unusually high interest rates that will weigh on the local government for decades.

(Additional reporting by Michael Connor in Miami; Editing by Tiziana Barghini, Eric Beech and Dan Grebler)

Comments