| April 20
April 20 Jefferson County and other Alabama
local governments do not have to have bonds as debt to file for
Chapter 9 federal bankruptcy, the state's top court said on
In a 13-page opinion supporting Jefferson County, which last
November filed the biggest U.S. municipal bankruptcy, the
Alabama Supreme Court said another distressed state government,
the City of Prichard, was eligible for Chapter 9 filing under
Alabama law even though Prichard had no outstanding bonds.
Lawyers for JPMorgan Chase and other big creditors
of Jefferson County maintain that state law barred Jefferson
County from filing its $4.23 billion bankruptcy because its
massive sewer-system and other debt was in the form of warrants.
The U.S. bankruptcy judge overseeing the case ruled against
the creditors last month but appeals of that ruling are under
Jefferson County officials welcomed the state court's
ruling, which would mean savings at a time the county is
pressing state legislators to restore a jobs tax vital to
Jefferson County's general fund budget.
"That saved us a ton of attorney fees. I feel real good
about it," Jefferson County Commissioner Sandra Little Brown
said. "I am now hoping and praying for a general fund fix."
Jefferson County filed for bankruptcy after the unwinding of
a tentative agreement that might have cut the county's debt load
by $1 billion. County finances have been savaged by massive
sewer-system debt, political corruption and the loss of a vital
local jobs tax.
Creditors battling the case said Jefferson County was
ineligible because it had no bond debt as required by state law.
Like most Alabama counties, Jefferson County only had warrants,
a form of debt popular in the state since the 1930s that does
not require direct voter approval