Deploying the “Prepackaged” Plan of Adjustment in Chapter 9

Chapter 9 Bankruptcy Strategies

“In today’s climate of faltering municipal finances and ballooning public employee benefits, a prepackaged plan of adjustment might offer a more palatable alternative to a municipality than the expensive, time-consuming, and sometimes meandering course of a chapter 9 case. Although chapter 9 rightly remains an option of last resort, triggered mainly in true crises or when municipalities emulate revenue-producing business enterprises that are otherwise distressed (such as health care districts or infrastructure authorities), it now seems more probable that municipalities will begin to use federal bankruptcy relief as an active tool to re-calibrate revenues, services and expenses. A prepackaged plan could provide a useful template to focus discussion and forge consensus while satisfying a key test for a municipality’s eligibility to file, and simultaneously offer the traditional benefits of a prepackaged plan in the form of speed and certainty.” Excerpt available below; book available from Aspatore Books (a Thomson Reuters business), www.west.thomson.com.

©2011 Thomson Reuters/Aspatore