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Wall St gets path to appeal Alabama bankruptcy setback
July 13 |
July 13 (Reuters) - Wall Street lawyers battling America's biggest municipal bankruptcy won the right to appeal the ouster of a creditor-friendly receiver for the massively indebted sewer system in Alabama's Jefferson County.
Judges of the U.S. Eleventh Circuit Court of Appeals in Atlanta said in a one-sentence decision on Thursday that Bank of New York Mellon and other creditors in Jefferson County's $4.23 billion bankruptcy can appeal a ruling that stripped receiver John Young of authority over the sewer system.
That Jan. 6 ruling by U.S. Bankruptcy Court Judge Thomas Bennett was a key victory for cash-strapped Jefferson County and returned control of the sewer system and its $13 million of monthly revenues to county officials.
Jefferson County last month lost a dispute over its use of those revenues, when Bennett ruled the county was improperly holding back funds from the share of revenues owed to holders of $3.2 billion of sewer-system bonds.
Young, a former water industry executive, was put in place in September 2010 by a state court at the request of creditors to manage the 140,000-customer system. He championed proposed increases in sewer rates of as much as 50 percent.
Jefferson County filed for bankruptcy protection on Nov. 9, 2011, after working for months to close a tentative agreement with creditors that had promised to reduce its debts by $1 billion.
The county's finances were overwhelmed by sewer-system financing aggravated by political and Wall Street corruption as well as the 2008 global credit crunch. Jefferson County, which has cut hundreds of jobs, last year lost a local jobs tax that had provided $75 million a year in revenue.
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