This is a follow-up to the earlier post on October 14 about Prichard, Alabama when the city failed to make the October payment to their retirees. According to the Press-Register city leaders do not expect to pay November either. To protect themselves from the lawsuit that ensued they filed Chapter 9 (municipal) bankruptcy yesterday. (Note to the municipal bond analysts reading this, Prichard does not have general obligation bonds outstanding at this time, although they do have water and sewer bonds, guaranteed by Assured Guaranty, which should not be affected by the bankruptcy filing). See link to al.com below:
http://www.al.com/news/press-register/metro.ssf?/base/news/1256721412135050.xml&coll=3
Thanks for the heads-up. Taxpayers should expect to see more situations like this across the country.
To track the trends, visit http://PensionTsunami.com.
I understand the Federal judge in the case ruled yesterday that retirees do not have the same rights as current employees and instead are little more than creditors.
Alabama has a state teacher pension plan. I wonder if contributions into that state plan that are in the rear from Prichard would make the state plan little more than another creditor.
The state pension plan before this happened was only at 77% funding requirements. It will be interesting to watch how the liability is spread to all of the remaining towns who have to make up Prichard’s liability.