By Michael Connor
Dec 19 (Reuters) - The judge overseeing America's biggest
municipal bankruptcy on Wednesday blocked a legal bid to force
Alabama's Jefferson County to keep running a hospital that
serves the poor, which the county says it can no longer afford
Birmingham, the state's largest city and located in
Jefferson County, had asked U.S. Bankruptcy Judge Thomas Bennett
to exempt it from a ban on lawsuits against the County so that
it could press a claim in state court that the county's
underused Cooper Green Mercy Hospital must maintain in-patient
and emergency services.
Birmingham and county residents do not want to lose the
But Bennett said in a 37-page opinion that Birmingham was
unlikely to win its case in state court and that he saw no
reason to lift automatic stays against lawsuits that Jefferson
County has had in place since its landmark, $4.23 billion
bankruptcy petition filed on Nov. 9, 2011.
"The automatic stays preclude the actions sought to be
brought in Alabama's courts by the city parties, and relief from
the automatic stays is denied," Bennett said.
Now in negotiations with creditors on a workout plan,
Jefferson County has cut hundreds of jobs, reduced government
services and defaulted on billions of dollars in bonds in a
crisis blamed on overspending on a sewer system, political
corruption and the loss of a local tax on wages.
The decades-old hospital, which loses $10 million or more a
year and specializes in indigent care, is winding down its
in-patient and emergency departments. Those actions will
eliminate 200 jobs and leave outpatient and urgent care clinics
at Cooper Green as of January 1.
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