By Michael Connor, Verna Gates and Tiziana Barghini
NEW YORK, Feb 7 (Reuters) - The creditors' trustee in
Alabama's municipal bankruptcy asked the U.S. bankruptcy court
to allow an accelerated payment on Jefferson County's debt.
The Bank of New York Mellon Corp, which collects the money
from the county, last week said that some payments due on Feb. 1
to owners of $3.14 billion of sewer debt were suspended.
The bank said on Wednesday in its filing to the court that
some bondholders did not agree to the trustee's application of
funds to the regularly scheduled payments, so that the trustee
did not have enough money to pay the principal.
Lawyers for creditors and Jefferson County, which filed for
Chapter 9 bankruptcy in 2011 mainly because of overwhelming debt
on its sewer system, are battling in court over sewer fee hikes
that would go in part to service the sewer warrants.
County officials have said they continue to pay money
collected from sewer system revenue to Bank of New York, which
is responsible for distributing interest and principal payments
to the owners of the defaulted sewer debt.
Tony Petelos, County Manager for Jefferson County told
Reuters: "We will continue, as we have in the past, to make
payments to the trustee."
A preliminary hearing on the motion will be held on March 7.
Owners of the debt include Wall Street banks, insurance
companies and hedge funds.
The case is United States Bankruptcy Court for the Northern
District of Alabama Southern division, in re: Jefferson County
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