* Resort town says can't afford $42 mln legal judgment
* Creditor says will contest bankruptcy eligibility
SAN FRANCISCO, July 2 The leaders of Mammoth
Lakes, California, voted on Monday to approve a bankruptcy
filing for the ski resort town, just days after Stockton,
California, became the most populous U.S. city to turn to
bankruptcy court for protection from its creditors.
The vote by the Mammoth Lakes town council to seek Chapter 9
bankruptcy protection was unanimous, according to a statement on
the town's website. (Statement:)
The town of about 8,000 residents in the Sierra Nevada
mountains about 300 miles (483 km) north of Los Angeles saw no
other options after its largest creditor, Mammoth Lakes Land
Acquisition, refused to negotiate concessions, the statement
said. Mammoth Lakes Land Acquisition won a $43 million legal
judgment against the town stemming from a property development
dispute that began in 2006.
A new state law requires financially troubled municipalities
to attempt mediation with their creditors before they may file
Lawyer Dan Brockett said the town invited Mammoth Lakes Land
Acquisition to enter into mediation only to follow the law until
it could move forward with a bankruptcy filing.
"The mediation in our view was something they would do to
check a box," Brockett told Reuters, adding that his client will
contest the town's eligibility for bankruptcy.
"We're going to fight this," Brockett said. "This whole idea
we forced them into bankruptcy is nonsense."
Brockett said the town snubbed a plan by his client that
would allow it to pay off the judgment over 30 years.
"We structured a very reasonable proposal to resolve this,"
Brockett said. "They're not even insolvent."
Lawyers for Stockton, a city of nearly 300,000 people in
California's Central Valley, are due to appear at Sacramento
court this week. The city filed for Chapter 9 bankruptcy
protection last week.
Stockton is seeking court approval for its 2013 fiscal year
budget. The city negotiated with creditors for three months but
failed to produce enough concessions to close its budget gap by
the time the deadline for the talks expired last week.