Wednesday, March 7, 2012

Judge clears way for record bankruptcy in Alabama

When was the last time a US judge ruled in favor of the American people over the banksters?  JP Morgan cannot be pleased. For those unfamiliar with how Jefferson County AL was screwed by JP Morgan into a $4 billion debt over a sewer system, please see Matt Taibi's excellent expose.

BIRMINGHAM, Ala. – A judge has cleared the way for an Alabama county to move forward with the largest municipal bankruptcy in U.S. history, overruling Wall Street claims that state law didn’t allow the county to file the case.

U.S. Bankruptcy Judge Thomas Bennett issued his order late Sunday, allowing Jefferson County, the state’s largest county, to remain in bankruptcy as it attempts to sort out more than $4 billion debt linked to borrowing for the county’s sewer system.
Bennett’s decision could be reviewed by the 11th U.S. Circuit Court of Appeals, which already has been asked to consider another question in the case.
Home to the state’s largest city of Birmingham and more than 650,000 people, Jefferson County filed the largest municipal bankruptcy ever in November after three years of negotiations failed to result in a settlement to pay off the debt. Lenders asked Bennett to throw out the case during a hearing December, arguing that Alabama’s 1901 Constitution doesn’t allow Jefferson County to file a municipal bankruptcy.
Trying to stop the bankruptcy in a move that could have resulted in more negotiations, a dozen lenders led by trustee Bank of New York Mellon (BY) claimed Alabama law permits bankruptcy only for bond debt. Jefferson County has a different type of debt called warrants, they argued.
The county argued that bankers were misapplying state law in hopes of getting the case dismissed, and that any government in the state can go bankrupt no matter what kind of debt it has.
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