• Scam Diego alerts

On Tuesday, the City of Vallejo filed its plan to exit bankruptcy. The city northeast of San Francisco had filed for Chapter 9 in May of 2008 after unions rejected wage cuts. Under the plan, general unsecured creditors would collect 5% to 20% of their claims, according to BloombergBusinessweek. Those creditors include retirees and former employees. Health care benefits for 400 retirees and surviving spouses are scheduled to drop to $300 a month from $1500 a month that some receive, according to the Wall Street Journal. The city will maintain its workforce at 312 employees, down 40% from 2004, according to the Journal. The city says it cannot provide essential services while paying its debts. The plan must be approved by creditors before the bankruptcy judge decides whether to approve it, although the judge will have some latitude in the process. BloombergBusinessweek says Vallejo would become the first general municipality that would not fully repay bankruptcy debts.

  • Scam Diego alerts

Comments

SanDiegoParrothead Jan. 20, 2011 @ 1:44 p.m.

So Don, all I hear from public workers is that Bankruptcy can't touch pensions already received by retirees. Now technically, the health care drop is not their pension, but if they can reduce health care, why not pensions?

0

Don Bauder Jan. 20, 2011 @ 8:10 p.m.

You are raising one of the critical questions of our time. See my item, just posted, on the possibility that states will be allowed to go bankrupt and alter contracts with retirees. Lawyers debate whether laws ban alteration of pension benefits; some argue the benefits are set in stone, others disagree. In my view, they are surely not inviolable if they cannot be paid. Best, Don Bauder

0

SurfPuppy619 Jan. 20, 2011 @ 9:46 p.m.

Muni/state Pensions will certainly be cut once the issue is properly put before a BK court. Vallejo has a bunch of idiots running that muni and did not put the pensions before the court.

They filed BK because of the salary and pensions, then do NOT raise the idea of a pension cut before the court-obviously because the majority of the clowncil were still in the pocket of the cops and FF's.

But the sad part is they filed BK then WASTED the opportunity to get the full value out of it. I think they left at least 50% of the BK value on the table by not including the pensions.

Not to worry-a tsunami of muni BK's are in the pipeline and once a major muni files there will be a wave-and the pension issue will go before a BK court. Once they do pensions will get haircuts and BK law will be set, and they will apply that BK law in every BK court in America.

0

Don Bauder Jan. 21, 2011 @ 9:32 a.m.

In its BK filing, Vallejo is asking for more than I thought it would seek several months ago. These are good cuts. Best, Don Bauder

0

SurfPuppy619 Jan. 22, 2011 @ 6:41 p.m.

Is it fair to cut the bond holders skin by 80%-95% and NOT cut the pensions AT ALL??

Not in my book.

If I were the bond holders I would object to that bogus plan, and object strenuously. I would tell the BK court to cut the pensions too, so all parties are treated more equitably.

0

Don Bauder Jan. 23, 2011 @ 10:47 a.m.

Remember, that Vallejo BK plan is only a proposal. Creditors and the judge still have a say. So your point may be considered. Best, Don Bauder

0

Sign in to comment

Join our
newsletter list

Enter to win $25 at Broken Yolk Cafe

Each newsletter subscription
means another chance to win!

Close