California Cities Face Bankruptcy Curbs - WSJ.com: "As California seeks more funds from its cash-strapped cities and counties to close a $21 billion budget deficit, some state legislators are pushing a plan that could compound municipalities' pain by making it tougher for them to file for bankruptcy.
The bill would require a California municipality seeking Chapter 9 bankruptcy protection to first obtain approval from a state commission. That contrasts with the state's current bankruptcy process, which allows municipalities to speedily declare bankruptcy without any state oversight so that they can quickly restructure their finances. The bill, introduced in January, has passed one committee vote and could reach a final vote by mid-July."
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I blogged on this some time ago. The bill is being pushed by the public employee unions. It would make a union-friendly, Democrat-controlled, state commission the gatekeeper to the bankruptcy court for California's cities.
2 comments:
Not to worry. The state will go BK anyway taking the munis with it.
Can anyone how California is exerting state level control over a municipality's rights under the federal bankruptcy code?
How long will it be before HOAs (particularly those under declarant control) impose a restrictive covenant requiring a homeowner to obtain permission from the Board before the homeowner can file bankruptcy?
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