Jefferson County, Alabama, has been on the brink of bankruptcy for months now. The County Commission voted recently to hire two bankruptcy attorneys to handle a potential filing, and has projected that a Chapter 9 filing would cost the county about 1 million dollars a month.
The county has not made full payments to bond investors who lent money to improve the county’s sewer system, in almost three years. Due to corruption and scandal involved in the county, four elected officials have been convicted of crimes, along with many of the companies the county has done business with.
Currently, the county is discussing potential steps to take to avoid bankruptcy, meeting with creditors who loaned the county money to create a sewer system. The sewer system costs ballooned because of violations of the Clean Air Act that had to be dealt with.
If no agreement can be reached, the county may file a Chapter 9 bankruptcy petition. To do so, the court must have specific state authorization, be insolvent, and obtain consent from a majority of its creditors. The bankruptcy court will grant the county the protection of the automatic stay, and the county’s assets will not be sold as in Chapter 7 bankruptcy. Chapter 9 provides for a reorganization and planning, rather than as much of a fresh start. Although rare, Chapter 9 has been filed by several municipalities over the years, most famously in Orange County in 1994.
If you may be dealing with financial troubles and think that you may need to file bankruptcy, consult with a Tucson bankruptcy attorney today.