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When Worlds Collide

BY Karen Grande, John Whitlock, Steven B. Smith
May 24, 2013

The first part of this article discussed the collision of the bankruptcy and public finance worlds, and the damage caused to bondholders and their respective professionals in the case of In re Las Vegas Monorail Company, 429 B.R. 317 (Bankr. D. Nev. 2010)(Las Vegas Monorail). This month, the authors analyze and discuss two other casess and share what bankruptcy and public finance lawyers need to know when navigating the mostly uncharted waters of municipal bankruptcy.

In re Jefferson County, Alabama

In In Re Jefferson County, Alabama, Jefferson County, AL, (the County) filed its Chapter 9 bankruptcy case on Nov. 9, 2011, after attempts to reach agreement with its creditors, particularly the holders of approximately $3.2 billion of special obligation warrants issued to finance rehabilitation and improvements to the sewer system in the County, had failed. Over a year before the commencement of the Chapter 9 case, a receiver had been appointed for the sewer system, managing it in place of the county commissioners and employees, many of whom had been convicted of, or pled guilty to, federal bribery and related charges. The proceedings were commenced by a new slate of county commissioners not subject to the taint of the misdeeds of their predecessors.

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