Hot! Bankrupt California City Goes to Trial

032513_Bankruptcy California_EJP Photo

After a California city filed bankruptcy last year, a federal judge has scheduled a trial to address objections by creditors. Stockton, California faces a four-day trial on whether it can remain under federal bankruptcy protection, and whether it will have to pay back hundreds of millions of dollars of debt. If the creditors win, they’ll be able to sue the city over the debt. If the city of Stockton wins, the creditors will likely not receive full repayment of the loans.

The case raises the question on whether a city can file bankruptcy, among other things. Mutual funds and their insurers are “crying foul” — if Stockton wins in state court, the city will set a precedent for other cities nearing bankruptcy.

Chaninat and Leeds attorneys are Criminal Defense Lawyers specializing in Thai criminal cases involving foreigners.

It’s clear what can happen when a government files for bankruptcy, as was almost the case in Cyprus where the banking system almost collapsed. In the days leading up to the talks that saved the crisis, the near-financial meltdown led to civil unrest. While the U.S. isn’t as close to a governmental seizure of assets as Cyprus was, cases like these give the impression that the country may be moving in that direction, albeit incrementally.

Read the full article here.

 

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Flickr photo courtesy of EJP Photo

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