States and local governments across the United States are experiencing serious financial distress. With falling revenues and reductions in state and federal aid, they are facing massive budget shortfalls. States like California, with a $25.4 billion shortfall, Illinois with a $15 billion deficit and New York with a $10 billion deficit, are trying to cope with troublesome obligations, including underfunded pensions, public-employee contracts and benefits, health care obligations, and bond debt. Many are predicting that the state and local government fiscal crisis will be the next economic disaster, right off the heels of the subprime mortgage crisis.
In the absence of a federal bailout, many states and municipalities may come to the view that bankruptcy is the only viable alternative in the face of debt and collective bargaining agreements which they are unable to restructure. In anticipation of the problems ahead, some states have already passed emergency manager legislation and enabling legislation which would allow the states and municipalities to avail themselves of Chapter 9 relief in the bankruptcy courts. Thus, despite its current political unpopularity, bankruptcy may be the unavoidable response of insolvent municipal entities in dealing with their financial crises.
Please join us for a 60-minute webinar in which Mayer Brown partners David Narefsky, Sean Scott and Robert Stoll will discuss how Chapter 9 of the US Bankruptcy Code can be used as a tool to address some of the problems facing state and local governments today. Topics addressed will include:
- An overview of Chapter 9: Who can file bankruptcy under Chapter 9 in its current form?
- Recent legislative activity and constitutional issues surrounding municipal and state bankruptcy law
- The advantages and limitations of using the Bankruptcy Code to restructure state and municipal debts and obligations
Sean T. Scott
J. Robert Stoll