June 1 Alabama's bankrupt Jefferson County and
its Wall Street creditors may extend for a month a temporary
agreement over cash generated by the county's sewer system at
the heart of its financial crisis, a judge has ruled.
U.S. Bankruptcy Judge Thomas Bennett late on Thursday issued
an order approving a continuation of a deal struck Feb. 15 that
required the county to pay $5.5 million to creditors monthly
through May to service its sewer debt.
The county and the creditors, including insurer Syncora
Guarantee, which backs a large share of Jefferson
County's $3.2 billion sewer debt, are battling in court over how
much of the system's net revenue should go to the creditors.
Other creditors such as Bank of New York Mellon and
JPMorgan Chase argue the cash-strapped county is
illegally holding back money the county claims is needed for
repairs and other capital expenses.
Bennett has not yet ruled on the dispute.
Home to Birmingham and the state of Alabama's most populous
county, Jefferson County on Nov. 9 filed a $4.23 billion
bankruptcy claim, the largest ever by a U.S. local government.
In April, the county skipped a $15 million general
obligation bond payment for the first time, as officials said
they needed the money to pay for basic government services.
State legislators two weeks ago spurned a bid by the county
to revive a wages tax that would have delivered an estimated $60
million a year in revenue.
(Reporting by Michael Connor in Miami, Editing by Gary Crosse)