San Bernardino Chapter 9 Sets Standoff with Bondholders

San Bernardino, Calif.’s decision this week to authorize a bankruptcy filing, which would make it the third California city to do so in less than a month, has shaken the municipal market and set up a likely showdown with bondholders. The City Council Tuesday night during a special meeting voted 4 to 2 with one abstention in favor of filing for Chapter 9 protection in U.S. Bankruptcy Court because it said it would otherwise be unable to pay its workers. The move came as a surprise to the municipal market as city officials have only in the last few days been quoted as using the word “bankruptcy.”

Bond Buyer

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