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Bankrupt Alabama county, creditors extend sewer deal
June 1 |
June 1 (Reuters) - Alabama's bankrupt Jefferson County and its Wall Street creditors may extend for a month a temporary agreement over cash generated by the county's sewer system at the heart of its financial crisis, a judge has ruled.
U.S. Bankruptcy Judge Thomas Bennett late on Thursday issued an order approving a continuation of a deal struck Feb. 15 that required the county to pay $5.5 million to creditors monthly through May to service its sewer debt.
The county and the creditors, including insurer Syncora Guarantee, which backs a large share of Jefferson County's $3.2 billion sewer debt, are battling in court over how much of the system's net revenue should go to the creditors.
Other creditors such as Bank of New York Mellon and JPMorgan Chase argue the cash-strapped county is illegally holding back money the county claims is needed for repairs and other capital expenses.
Bennett has not yet ruled on the dispute.
Home to Birmingham and the state of Alabama's most populous county, Jefferson County on Nov. 9 filed a $4.23 billion bankruptcy claim, the largest ever by a U.S. local government.
In April, the county skipped a $15 million general obligation bond payment for the first time, as officials said they needed the money to pay for basic government services.
State legislators two weeks ago spurned a bid by the county to revive a wages tax that would have delivered an estimated $60 million a year in revenue. (Reporting by Michael Connor in Miami, Editing by Gary Crosse)
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