“Chapter 9: Last Resort for Municipalities”

Arent Fox partner David Dubrow’s article, “Chapter 9: Last Resort for Municipalities,” was published in a recent edition of The Bond Buyer.

In the article, David explores several key aspects of the five-year business plan recently adopted by the city of Vallejo, California, in the wake of the city’s decision to file for Chapter 9 municipal bankruptcy.

“While bankruptcy has been commonplace among corporations facing severe financial issues, it has not been common among municipalities,” writes David. “However municipal bankruptcy – Chapter 9 under the Bankruptcy Code – is increasingly being considered as an option of last resort for addressing the growing fiscal crisis of municipalities. ... Vallejo is the only medium-sized city to have filed a petition under and gained benefits from a Chapter 9 bankruptcy proceeding since the Great Depression. It recently adopted a five-year business plan that will serve as the basis for a proposed plan of adjustment in its Chapter 9 proceeding. While it is premature to draw definitive conclusions from the Vallejo bankruptcy, there are a number of conclusions that can be made at this time.”

To read The Bond Buyer article in its entirety, please click here.