More than two and a half years after the city of Stockton, Calif. declared insolvency, Chief United States Bankruptcy Judge Christopher Klein has confirmed the city’s proposal for exiting Chapter 9 bankruptcy.
The city says it saved $2 billion through agreements with creditors, employee groups and retirees that were reached before the start of the trial. Significantly, Stockton will emerge from bankruptcy without having to seek adjustments to its pension obligations under the California Public Employees’ Retirement System (CalPERS).
Klein had ruled previously that CalPERS wasn’t entitled to special protection, the first time the nation’s largest public pension fund was found vulnerable to cuts in a bankruptcy.
Next up? Detroit, which will learn next week whether it can proceed with a $7 billion debt-cutting plan.