By Michael Connor
Nov 15 (Reuters) - Negotiators for Alabama's bankrupt
Jefferson County and Wall Street creditors are making modest
headway but still have a long way to go before reaching a deal
to end America's biggest municipal bankruptcy, county leaders
said on Friday.
After meeting creditors of the county's sewer system,
Jefferson County Commission President David Carrington and
Commissioner Jimmie Stephens gave no details but said more
negotiating sessions were expected in New York in early
"Yesterday's meetings with the sewer creditors in Los
Angeles were productive, but much more work needs to be done
before there can be a consensual agreement," Carrington and
Stephens said in a written statement.
Home to Birmingham, Alabama's biggest city, Jefferson County
on Nov. 9, 2011, filed a $4.23 billion Chapter 9 municipal
bankruptcy caused mainly by more than $3 billion of soured sewer
system debt, political corruption and the loss of a local jobs
tax worth about $60 million a year.
The county has defaulted on debt payments, laid off hundreds
of government workers and cut back on police, repairs, medical
and other essential services.
Under Chapter 9, the county gets much relief from lawsuits
and creditors but is obliged to develop a plan of adjustment
sketching out how it will satisfy creditors and fund future
The plan must ultimately be approved by a U.S. bankruptcy
judge, and Carrington has said he hopes to have the plan ready
sometime this winter.
Last week, Carrington, Stephens and other county
commissioners approved a sewer-system rate hike of about $2 a
month for most customers. The rate hike will be the first since
2008 and equals a rise of about 5.2 percent over five years,
based on the county's average monthly sewer bill of $38 for
about 126,000 customers.
Wall Street creditors say the rate hike was too little and
asked Judge Thomas Bennett, who is overseeing the case, to allow
them to press for bigger increases in a state court. Bennett has
not ruled on that request.
Bondholders, including some who still draw payments from the
sewer system's revenues after expenses, argued that the county's
rate hike badly trailed national trends of increases of more
than 26 percent over five years.
A tentative agreement reached prior to last November's
bankruptcy filing fell apart. That deal might have delivered a
$1 billion reduction in the county's debts.
Follow us on Twitter @ReutersLegal | Like us on Facebook