| July 13
July 13 Wall Street lawyers battling America's
biggest municipal bankruptcy won the right to appeal the ouster
of a creditor-friendly receiver for the massively indebted sewer
system in Alabama's Jefferson County.
Judges of the U.S. Eleventh Circuit Court of Appeals in
Atlanta said in a one-sentence decision on Thursday that Bank of
New York Mellon and other creditors in Jefferson County's $4.23
billion bankruptcy can appeal a ruling that stripped receiver
John Young of authority over the sewer system.
That Jan. 6 ruling by U.S. Bankruptcy Court Judge Thomas
Bennett was a key victory for cash-strapped Jefferson County and
returned control of the sewer system and its $13 million of
monthly revenues to county officials.
Jefferson County last month lost a dispute over its use of
those revenues, when Bennett ruled the county was improperly
holding back funds from the share of revenues owed to holders of
$3.2 billion of sewer-system bonds.
Young, a former water industry executive, was put in place
in September 2010 by a state court at the request of creditors
to manage the 140,000-customer system. He championed proposed
increases in sewer rates of as much as 50 percent.
Jefferson County filed for bankruptcy protection on Nov. 9,
2011, after working for months to close a tentative agreement
with creditors that had promised to reduce its debts by $1
The county's finances were overwhelmed by sewer-system
financing aggravated by political and Wall Street corruption as
well as the 2008 global credit crunch. Jefferson County, which
has cut hundreds of jobs, last year lost a local jobs tax that
had provided $75 million a year in revenue.