| RIVERSIDE, Calif., July 10
RIVERSIDE, Calif., July 10 The city of San
Bernardino, California, set new deadlines in an effort to
accomplish some measure of progress in a municipal bankruptcy
case that has slowed to a crawl over the past two years.
On Thursday, U.S. Bankruptcy Court Judge Meredith Jury
agreed to a series of dates presented by San Bernardino that
outlined a roadmap for the city to negotiate with its police and
fire unions. Under the new schedule, the city aims to propose a
preliminary plan of adjustment, a blueprint at the center of a
municipal bankruptcy case, in early fall.
"We are preparing a 'small p' plan," Paul Glassman, the
attorney representing San Bernardino, said during a status
hearing on Thursday. "Both sides wants to schedule things
quickly, that is what we're hearing."
After entering Chapter 9 protection in August 2012 with a
budget deficit of $45 million, San Bernardino's case has nearly
come to a standstill. The city spent months in mediation with is
largest creditor, the California Public Employees' Retirement
System (Calpers), before reaching an interim deal last month.
During that time, unions representing safety workers became
increasingly anxious with the lethargic pace of progress.
Earlier this year, the city imposed unilateral pay and benefit
cuts on its safety unions. The unions opposed the move, but they
cannot fight while the bankruptcy proceedings continue.
"We would like to see the process accelerated a little bit,"
Corey Glave, attorney representing the city's firefighter union,
told the court.
Under the new schedule, San Bernardino aims to potentially
hash out its disagreements with its police and fire unions this
summer, before returning to the court for a pre-plan hearing in
The judge told lawyers representing the Southern California
city that she hoped the new deadlines would put "a fire under
the city to get whatever you need to get done done."
San Bernardino is one of a handful of municipal bankruptcies
being closely watched by the $3.7 trillion U.S. municipal bond
market. Bondholders, public employees, and other state and local
governments are keenly interested to understand how financially
distressed cities handle their debts to Wall Street compared to
other debtors, like large pension funds such as Calpers, during
Chapter 9 protection.
Stockton, another California city that declared bankruptcy
around the same time as San Bernardino, is significantly closer
to exiting Chapter 9. Detroit, Michigan, which filed the biggest
municipal bankruptcy in U.S. history in July 2013, filed a plan
of adjustment to deal with its $18 billion of debt in February.
San Bernardino's next status hearing is scheduled for Aug.
(Reporting By Robin Respaut; Editing by Grant McCool)