June 2020

Municipal Restructuring, COVID-19, and Chapter 9


In almost a century since US Congress gave local municipalities the ability to restructure their debts under Chapter 9 of the Federal Bankruptcy Code, any government entity even considering that possibility has faced an overwhelming deterrent: the stigma of bankruptcy. The coronavirus pandemic could change that attitude. Cities and towns, counties, and special-purpose entities all across the country face severe financial problems. It is not a local phenomenon.

This article further discusses the possibilities of reorganization and a Chapter 9 filing as a possible step by legislators, decision makers and local government entities of all kinds.

This piece was originally published by Bloomberg Law on June 12, 2020. It was reproduced with permission from Copyright 2020 The Bureau of National Affairs, Inc. (800-372-1033) www.bloombergindustry.com.

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