U.S. bankruptcy judge set to rule against Calpers on San Bernadino

RIVERSIDE, California Fri Dec 21, 2012 2:21pm EST

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RIVERSIDE, California (Reuters) - A U.S. bankruptcy judge said on Friday that the court would likely deny an attempt by the California Public Employees Retirement System to bypass the bankruptcy court and seek to collect overdue pension payments from the bankrupt city of San Bernardino in state court.

The tentative oral rule came at the opening a first hearing in the bankruptcy case that may set broad precedents about whether pension payments get priority when a government goes broke.

Technically, the ruling would deny Calpers request that the court lift the automatic bar on collection actions that comes with a bankruptcy filing. Calpers has also made a broader argument that San Bernardino should not be eligible for bankruptcy and that state law should prevail when it comes to pension payments.

The judge, Meredith Jury, has yet to consider those arguments.

(Reporting By Jonathan Weber and Tim Reid; Editing by David Gregorio)

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