Judge OKs Stockton’s Pension Deal, Bankruptcy Exit
More than two and a half years after the city of Stockton, Calif. declared insolvency, Chief United States Bankruptcy Judge Christopher Klein on Oct. 30 confirmed
the city’s proposal for exiting Chapter 9 bankruptcy.
The city says it saved $2 billion through agreements with creditors, employee groups and retirees that were reached before the start of the trial. Significantly, Stockton will emerge from bankruptcy without having to seek adjustments to its pension obligations under the California Public Employees’ Retirement System (CalPERS).
Klein had earlier ruled that CalPERS wasn’t entitled to special protection, the first time the nation’s largest public pension fund was found vulnerable to cuts in a bankruptcy.
The National Conference on Public Employee Retirement Systems (NCPERS) wasted no time in praising the Oct. 30 ruling. In a Halloween statement
, NCPERS Executive Director and Counsel Hank Kim said that the organization “applauds” Klein’s action and that the ruling “means the city will be able to emerge from two years of financial uncertainty with its public pensions and public safety services intact.”
Next up? Detroit, which will learn next week whether it can proceed with a $7 billion debt-cutting plan.