Judge Approves California City’s Bankruptcy Plan
A judge has approved a debt plan by Stockton, California, one of the largest U.S. cities to declare bankruptcy, allowing it to reorganize more than $900 million in long-term debt.
U.S. Bankruptcy Judge Christopher Klein said Thursday that Stockton can use the plan to exit the court's Chapter 9 protection, which it sought in 2012.
The city negotiated deals with all major creditors except Franklin Templeton Investments.
The investment firm argued the city wasn't touching a massive employee pension fund but was asking the company to walk away from collecting nearly $32.5 million still owed.
Klein ruled earlier this month that bankruptcy law allows the city to treat pension obligations like any other debt, meaning the city could trim benefits.
Stockton was the largest bankrupt city in the nation before Detroit filed for bankruptcy last year.