A Tale Of Two (Bankrupt) Cities

Michael Sweet was quoted in the California Lawyer article "A Tale of Two (Bankrupt) Cities." While the full text can be found in the June 2013, issue of California Lawyer, a synopsis is noted below.

After delivering his findings at a hearing last April in Stockton's Chapter 9 proceeding, U.S. Bankruptcy Judge Christopher Klein addressed the legal status of the California Public Employees Retirement System (CalPers).

Bond insurers had forced a trial to determine whether the city was eligible for bankruptcy, leaving pensions statewide to rise or fall depending on the answer.

The message may have been directed at San Bernardino, which declared bankruptcy last summer, but avoided meeting with creditors by declaring a fiscal emergency.

"It's really a tale of two cities," says Michael A. Sweet. "These two cases are potentially precedent-setting, so both CalPERS and the bond insurers are spending big money on the litigation."

Sweet believes CalPERS is trying to avoid a ruling on the big issues, such as, the...