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Print Book :1 volume, softbound
ISBN: 9780769848426
Published: March 29, 2012
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This Collier Monograph presents a thorough treatment of chapter 9 of the Bankruptcy Code, which sets forth the bankruptcy relief available to state municipalities. Chapter 9 is a powerful yet underutilized restructuring tool available to financially challenged municipalities and public corporations within the United States. Chapter 9 provides an express means to compromise municipal obligations against a creditor's wishes. Chapter 9 also gives a municipality the ability to operate while in bankruptcy with relatively minimal judicial oversight, protected by the automatic stay, free of the risk of a competing plan, liquidation, the appointment of a trustee or many of the other controls that normally act as a check upon a debtor during a bankruptcy reorganization case.

The topics include:
• the purpose of municipal bankruptcy;
• nonbankruptcy alternatives to Bankruptcy Code chapter 9;
• comparison of chapter 9 to chapter 11;
• prepetition planning, including negotiations with creditors and creation of a restructuring plan;
• eligibility to file under chapter 9commencement of the chapter 9 case;
• a municipality's operating in chapter 9;
• reducing liabilities and exiting bankruptcy;
• history of chapter 9; and
• a listing of chapter 9 state authorizing statutes.

Authors / Contributors

Table of Contents

Section 1 Purpose of Municipal Bankruptcy

Section 2 Nonbankruptcy Alternatives to Chapter 9

Section 3 Comparison of Chapter 9 to Chapter 11

Section 4 Prepetition Planning

[1] Negotiations with Creditors

[2] Creation of a "Restructuring Plan"

[a] Types of Municipalities

[b] Long-Term Debt

[c] Operating Revenues and Expenses

[3] Role of a Financial Advisor

[4] Prepackaged/Prenegotiated Plan

Section 5 Eligibility

[1] Definition of a "Municipality" Under the Bankruptcy Code

[a] "Political Subdivision"

[b] "Public Agency"

[c] "Instrumentality"

[i] Sovereign Functions and Powers

[ii] Level of Public Control

[iii] State's Designation and Treatment

[2] Specific Authorization by the State to File Chapter 9

[a] Statutory Authorization

[b] Authorization by a Governmental Officer or Organization

[3] Insolvency

[a] Generally Not Paying Its Debts as They Become Due

[b] Unable to Pay Its Debts as They Become Due

[4] Desire to Effect a Plan

[5] Negotiations with Creditors

[a] Failed Negotiations Were in Good Faith

[b] Negotiations Were Impracticable

Section 6 Commencement of the Case

[1] Petition

[2] Selection of a Bankruptcy Judge

[3] List of Creditors

[4] Notice

[5] Objections to Petition, Order for Relief

[6] Dismissal of Case

Section 7 Operating in Chapter 9

[1] Limited Power of the Court

[a] No Interference with Political Governance

[b] No Interference with Property and Revenues

[2] Financing and Borrowing Money

[a] Increasing Revenue During Chapter 9

[b] Borrowing Money During Chapter 9

[3] Retention of Professionals

[4] Committees

[5] Utility Companies

[6] Role of the United States Trustee or Bankruptcy Administrator

[7] Automatic Stay

[a] Stay of Action Against Officers and Inhabitants

[b] Stay Does Not Operate as a Stay of Application of Pledged Special Revenues

[8] Avoiding Powers

[a] Preference Actions Pursuant to Section 547

[b] Fraudulent Transfers and Obligations Pursuant to Section 548

[c] Postpetition Transactions Pursuant to Section 549

[d] Liability for an Avoided Transfer Pursuant to Section 550

[e] A Creditor May Seek to Appoint a Trustee to Pursue Avoidance Actions

[f] Statute of Limitations in Chapter 9 Avoidance Actions

[9] Bondholders

[a] General Obligation Bonds

[b] Special Revenue Bonds

[i] Revenues from Transportation or Utility Projects

[ii] Special Excise Taxes

[iii] Incremental Taxes Attributable to a Specific Project

[iv] Revenues Arising from Particular Municipal Functions

[v] Taxes Levied to Finance a Specific Project

[c] Treatment of Bonds

[10] Assertion and Filing of a Claim

[a] Proofs of Claim

[b] Priority and Administrative Claims

[i] No Administrative Expense Claim for General Postpetition Operating Expenses

[ii] Unsecured Priority Claims Are Not Recognized Under Chapter 9

[iii] Payment of Adequate Assurance

[11] Disposition of Assets

[a] Section 363 Sale

[12] Assumption, Assignment, and Rejection of Executory Contracts

[a] Treatment of Executory Contracts in General

[i] What Is an Executory Contract?

[ii] Can the Contract Be Rejected?

[iii] Rejection of Executory Contract

[b] Collective Bargaining Agreements

[i] Bildisco

[ii] Section 1113

[iii] Orange County

[iv] Vallejo

[v] Practical Effect of Rejection

[c] Pension Plans

[i] Are Pension Plans Contracts?

[ii] Are Pension Plans Executory Contracts?

[iii] The Automatic Stay

[iv] Rejection in Chapter 9 and Claim Treatment

Section 8 Reducing Liabilities and Exiting Bankruptcy

[1] Plan of Adjustment

[a] Exclusive Right of Debtor to File Plan

[b] Confirmation Standards

[i] Section 901

[ii] Section 943

[iii] Section 1129(a)(2)–Compliance

[iv] Section 1129(a)(3)–Good Faith

[v] Section 1129(a)(6)–Regulatory Approvals

[vi] Section 1129(a)(8)–Acceptance

[vii] Section 1129(a)(10)–One Consenting Class

[viii] Section 943(b)(2)

[ix] Section 943(b)(3)

[x] Section 943(b)(4)

[xi] Section 943(b)(5)

[xii] Section 943(b)(6)

[c] Best Interests of the Creditors–Difference Between Chapter 11 and Chapter 9

[i] Best Interest of Creditors Test

[ii] Feasibility

[d] Section 1129(b)–Cramdown Requirements

[2] Discharge

[a] General Rule

[i] Effect of Discharge on Postpetition Debt

[b] Exceptions To Discharge

[3] Post-Bankruptcy Considerations

[4] Capital Markets

Appendix A  History of Chapter 9

Appendix B  Chapter 9 State Authorizing Statutes