Legislative Update: California Assembly Bill 506 on Bankruptcy Code Chapter 9 Eligibility

Effective January 1, 2012, California amended its statutory authorization for its local public entities to commence a municipal bankruptcy filing under chapter 9 of the Bankruptcy Code. Previously, California’s local public entities were freely authorized to file a chapter 9 case (one of only 11 states that permitted such filings without conditions or preapproval). This article discusses the requirements of the new law.