This lawsuit is sending warning signs up in municipalities everywhere in the America. In the middle of the worst economic crisis in several years, Jefferson County, Alabama is about to file for Chapter 9 bankruptcy.
Since June, quite a few county employees have been let go without compensation. The region is buried in litigation because the individuals seek their pay. The county’s creditors are coming after them, hoping to block the bankruptcy.
Right at the heart of the argument is, of all things, is the county’s sewage system. Their finances are spinning out of control, with well over $3 billion in debt. The population of the county is at around 660,000. This means if nearly every citizen belonging to the county were required to pay for the sewage system’s debt, each taxpayer would have to pay $4550
As journalists wrestle to write the best innovative “flushing money down the toilet” pun for the evening news, the most populated county in Alabama continues to face challenges. A hearing is scheduled before the Alabama Supreme Court to establish if the county has the right to declare Chapter 9.
The question rotates on whether that sewage debt contains bonds or debts. Alabama law prevents its counties from declaring bankruptcy unless they have issued refunding or funding bonds. Jefferson County definitely is not in that position. Nevertheless, the County is still appealing to the Supreme Court.
Meanwhile, judges and county officials are running through their own immense “means test” to figure out whether the county has the ability to pay back its debts or not. This is right-whether anyone is filing for bankruptcy or a town, a means test needs to be passed. A municipality has got the same responsibility to pay its debts as that municipality’s residents.
Jefferson County’s debt is held on Wall Street, specifically at JP Morgan Chase and also the Bank of New York Mellon Corp. Both of these companies will most likely stand in front of the Alabama Supreme Court discussing whether or not the county will be able to default on its debt.
The final results, at this stage, remains up in the air. Jefferson County is one of countless municipalities in the nation to consider bankruptcy this coming year. As the US economy grow more insolvent, basically on life support while the Federal Reserve willingly adds to the national debt to prevent depression, smaller municipalities scramble to repay the bills.
Are you looking for more information on Queens Bankruptcy? Speak with a Queens Bankruptcy Attorney today to learn more about your rights.