Friday, 31 October 2014

Stockton Bankruptcy Plan Approved!

I can’t recall the last time I was this happy to be wrong.  I should stick to predicting the economy as I have a poor track record predicting judges.

It seems the judge was being very practical, and recognized the precarious public safety situation in Stockton and the risk of some very negative outcomes, especially in the short-run, if he were to reject the plan.

I am still a little surprised that he approved a plan that treated Franklin so severely (12% overall repayment, less than 1% on unsecured debt) - not just when compared to the City’s retirees - but the other unsecured bond creditors who had settled.  That doesn’t mean I am sympathetic to Franklin, they loaned the City money in 2009 without adequate collateral when the economic and financial crisis of the City was obvious.

It’s time to move forward.  I am very happy for Stockton today.

About the Author

Ethan Jacob

Author & Editor

I am Ethan Jacob Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law..

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