June 18 Bankrupt San Bernardino has reached an interim deal with its biggest creditor, the California Public Employees' Retirement System (Calpers), that will help the city plan its exit from bankruptcy, according to a court filing.
In a status report ahead of a hearing on Thursday with the judge overseeing the bankruptcy, the city's lawyers said the deal has led San Bernardino to start paying back its debt to Calpers.
The agreement marks a significant breakthrough in the bankruptcy. When the parties last met in May the judge expressed her frustration over the slow pace of talks between the city and Calpers, and that the city appeared a long way from producing a bankruptcy plan, known as a plan of adjustment.
The city refused to divulge details of the deal, which has only been shared with a court-appointed mediator. An interim agreement has been reached with Calpers "regarding various items," the city said.
San Bernardino, 65 miles east of Los Angeles, declared bankruptcy in 2012. For an entire year after that, it stopped making its employer contributions to Calpers. No entity has ever before halted payments to Calpers, America's biggest public pension fund with assets of $277 billion.
Calpers says the city's arrears are about $16.5 million, with growing interest.
Calpers is the only remaining creditor that continues to oppose San Bernardino's bankruptcy. The case has moved far slower than the bankruptcy proceedings in Stockton, California, and last year's $18 billion crash of Detroit, where a trial to adjudicate its bankruptcy plan begins in August. (Reporting by Tim Reid; Editing by Grant McCool)