(NaturalNews) In what is shaping up to become the nation’s largest-ever municipal insolvency, Jefferson County, Ala., officials recently hired a major law firm to tackle the county’s approaching Chapter 9 bankruptcy filing. A federally-mandated sewer upgrade project plunged the county into severe debt back in the 1990s from which it has since been unable to recover. And since none of their alternative efforts have been successful, county officials say bankruptcy may become the final, and only, option.
“Everything we’ve been trying to do to avoid bankruptcy has failed,” said County Commissioner Sandra Little Brown to FOX Business in a recent interview. “So now, we have to get an agreement or we go bankrupt.”
Klee, Tuchin, Bogdanoff Stern, LLP, the same law firm that handled the massive 1994 bankruptcy of Orange County, Calif. — which, to this day, remains the most expensive municipal bankruptcy in history — has been tasked with overseeing Jefferson County’s bankruptcy filing. If county officials decide there is no choice but to go through with the filing, then Jefferson County will assume Orange County’s spot as top bankruptcy.
Jefferson County is continuing talks with creditors to try to negotiate a settlement, but so far none have offered an “acceptable” solution, according to County Commissioner Jimmie Stephens. Jefferson county’s general fund remains at a major shortfall, and its bond debts represent tens of millions of dollars. According to FOX Business, the county’s overall debt clocks in at more than $3 billion.
“We’re ready for a negotiated settlement. Or we’re ready to file bankruptcy,” added Commissioner Brown. “One or the other.”
The filing will indeed be major, but it will likely not be the last. A 2010 report on cities nearing default and bankruptcy indicates that in addition to Jefferson County, both Harrisburg, Penn. and Detroit, Mich. are assuming the same financial fate (http://money.cnn.com/2010/05/28/new…).
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Another one bites the dust: Alabama’s most highly populated county hires bankruptcy lawyers in advance of financial meltdown