UPDATE 1-Bankrupt Stockton, California to present adjustment plan Friday
SACRAMENTO, Calif., Sept 24 (Reuters) - The bankrupt city of Stockton, California will present a draft plan to adjust its debt on Friday and its city council will review it next week, a lawyer for the city told Reuters on Tuesday.
If Stockton's city council approves the draft, it could be filed as the final plan with the U.S. Bankruptcy Court in Sacramento on or shortly after October 4, attorney Marc Levinson said.
Stockton's city council will be able to revise the draft plan, Levinson later told U.S. Bankruptcy Judge Christopher Klein during a hearing on Stockton's Chapter 9 municipal bankruptcy case.
A city of nearly 300,000 in California's Central Valley, Stockton filed for municipal bankruptcy last year and was the biggest U.S. city to do so until Detroit filed for protection from creditors this summer.
Klein in April approved Stockton's petition for bankruptcy, a setback for the city's capital markets creditors, which had contested the city's bid for bankruptcy eligibility. They object to Stockton's keeping up its payments to the state pension fund while targeting bondholders for losses to help restructure its finances.
Alabama's Jefferson County in its bankruptcy restructuring plan in June also proposed losses for bondholders, becoming the first local government to do so since the 1930s.
Levinson told Klein he was hopeful ongoing confidential talks with Stockton's capital markets creditors will lead to agreements with them.