According to an article by the Los Angeles Times the City of Stockton, California is allowed to proceed on the path of their chapter 9 municipal bankruptcy. This is a huge development as municipal bankruptcies are not only rare, but exceedingly hard to pursue.
The battle will be over the treatment of Stockton's pension liability of close to a billion. That's right, close to a billion dollars of unfunded pension liability. Does this sound familiar? Illinois' pension system is also in a mess and its municipalities are going to be hard pressed to avoid Stockton's fate.
My opinion is that Stockton is thinking smart as there is no way that its citizenry can be expected to make up this shortfall by way of higher taxes and austerity measures.
The author, Ben W. Koyl, is an attorney located in Chicago, IL. He is the principal of the Law Office of Ben W. Koyl, P.C. with offices located in the Chicago Loop, Beverly Woods / Blue Island, and Joliet, IL. The firm's website is http://www.chicagobklaw.com.
