Tuesday, September 23, 2014
YOLO COUNTY NEWS
99 CENTS

Bankrupt Stockton says final creditor won’t budge

Stockton Bankruptcy Trial

A "For Lease" sign adorns the Bank of Stockton building in 2012, as the city headed for bankruptcy. Now, one of the city's creditors insists there's enough money to pay up. AP file photo

By
From page A2 | May 13, 2014 |

SACRAMENTO (AP) — An attorney for the largest city in California to seek bankruptcy protection told a judge Monday that he has tried to reach a deal with Stockton’s last major creditor, but the company is not budging.

Marc Levinson, an attorney for the city, made the comments during his opening statement in a trial over Stockton’s plan to emerge from bankruptcy. The city is asking a judge to approve the plan for reorganizing more than $900 million in long-term debt, while Franklin Templeton Investments wants U.S. Bankruptcy Judge Christopher Klein to reject it.

The city has reached deals with all of its major creditors, except for Franklin, which took Stockton to trial.

The investment firm’s attorney, James Johnston, says it is being offered 1 cent on the dollar for a $35 million loan given to Stockton in 2009 to build firehouses, parks and to move its police dispatch center, amounting to $350,000.

Johnston told the judge that Stockton struck much more favorable deals with other creditors. The attorney said the city is making a meager comeback, allowing it to pay its debts to the firm.

“The city is recovering,” Johnston said. “It is not a strong recovery, but it is undeniably recovering.”

Levinson said Franklin is a billion-dollar investment firm and its potential loss in Stockton amounts to a “rounding error.”

“For the city, this week is a fight for its life,” he said.

Stockton, an inland port city 80 miles east of San Francisco, filed for Chapter 9 protection in 2012, making it the nation’s largest bankrupt city before Detroit filed last year. Vallejo went through bankruptcy before Stockton. San Bernardino filed shortly after Stockton, but it has yet to present an exit plan.

Stockton’s leaders say the city fell victim to an unforgiving boom-and-bust economic cycle.

Before the recession, leaders spent millions of dollars revitalizing the downtown by buying a new City Hall and building a marina, a sports arena and a ballpark. The city issued about 3,000 permits annually to build new homes, and it paid police premium wages and health benefits.

With the recession, building dried up, and Stockton became ground zero for home foreclosures. Like many residents, City Hall couldn’t pay its bills. The city slashed millions of dollars from its budget and laid off 25 percent of its police officers. Crime soared.

City Manager Kurt Wilson has said the bankruptcy could be over as soon as June 30. But if the judge rejects the plan, it could take another six months, he said.

Stockton consultant Robert Leland spent much of the day on the witness stand answering questions about the city’s financial projections. The investment firm believes the city is too conservative and that Stockton could pay its debts. Franklin argues that the city agreed to pay its other creditors 52 percent or more of what it owes over the next 40 years.

Leland said Stockton needs to save up reserves to avoid the problems it currently faces. It also needs to update old accounting systems, one of the repairs the city has put off for years.

“There are many, many pressing needs,” Leland said.

————

By Scott Smith

Comments

comments

The Associated Press

.

News

UC joins U.N.-supported Principles for Responsible Investment

By Special to The Enterprise | From Page: A1

 
Nature’s beauty is in our own back yard

By Charlotte Orr | From Page: A1 | Gallery

Jury finds Dixon man guilty of mortgage fraud

By Enterprise staff | From Page: A1

 
 
U.S., Arab allies hit Islamists in Syria, Iraq

By The Associated Press | From Page: A2 | Gallery

Bob Dunning: These are the tanks we get

By Bob Dunning | From Page: A2 | Gallery

 
Wind threatens firefighting effort

By The Associated Press | From Page: A2

Harmony Award nominations sought

By Enterprise staff | From Page: A3

 
Sheriff’s Office honored for safe-driving initiative

By Special to The Enterprise | From Page: A4

Baha’is celebrate 50th anniversary in Davis

By Special to The Enterprise | From Page: A4

 
Downtown gift cards get a new perk

By Enterprise staff | From Page: A4

Unscheduled landing

By Enterprise staff | From Page: A4 | Gallery

 
Free community yard sale Saturday

By Enterprise staff | From Page: A4

Street Food Rodeo rolls into West Davis

By Enterprise staff | From Page: A4

 
Wolk kicks off ‘Morning with the Mayor’

By Enterprise staff | From Page: A4

So you want to be an entomologist?

By Kathy Keatley Garvey | From Page: A4

 
Pets of the week

By Enterprise staff | From Page: A5 | Gallery

 
Forum will answer questions about new license law

By Enterprise staff | From Page: A5

Applications open for Biberstein grants

By Special to The Enterprise | From Page: A10

 
.

Forum

Daughter has her own opinions

By Creators Syndicate | From Page: B5

 
Brother’s drinking out of control

By Creators Syndicate | From Page: B5

We must not stand for perpetual war

By Special to The Enterprise | From Page: A6

 
Don’t cut all the trees

By Letters to the Editor | From Page: A6

A great Day in the Country

By Letters to the Editor | From Page: A6

 
Donors support school matinees

By Letters to the Editor | From Page: A6

A big Explorit thanks!

By Letters to the Editor | From Page: A6

 
Teacher tenure becomes key campaign issue

By Tom Elias | From Page: A6

Tom Meyer cartoon

By Debbie Davis | From Page: A6

 
.

Sports

Devil golfers soar past Sheldon

By Enterprise staff | From Page: B1

 
Blue Devils bounce back against Pleasant Grove

By Evan Ream | From Page: B1 | Gallery

Running game powered Devils in first football win

By Thomas Oide | From Page: B1 | Gallery

 
Davis field hockey team rights ship at Lassen

By Enterprise staff | From Page: B1

UCD roundup: Aggie women reach finals of East/West golf tourney

By Enterprise staff | From Page: B2Comments are off for this post | Gallery

 
U11s get a win in an eventful weekend of youth football

By Enterprise staff | From Page: B3 | Gallery

Giants beat L.A. in 13 innings

By The Associated Press | From Page: B8 | Gallery

 
A’s support Samardzija in a win over Angels

By The Associated Press | From Page: B8

.

Features

.

Business

.

Obituaries

Carol L. Walsh

By Special to The Enterprise | From Page: A4

 
.

Comics

Comics: Tuesday, September 23, 2014 (set 1)

By Creator | From Page: B5

 
Comics: Tuesday, September 23, 2014 (set 2)

By Creator | From Page: B7