California City of Stockton’s Bankruptcy Could Set Precedent

wpStockton City, now known as one the most populated cities in the United States to enter bankruptcy, may see this new page as an opportunity to start anew and properly provide for the needs of citizens. A judge recently accepted the California city’s bankruptcy application so people in there could file bankruptcy.

Christopher Klein, U.S. Bankruptcy Judge said that the bankruptcy declaration was needed to allow the city to continue to provide basic services.

He added “It’s apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law”

It shows that in the year 2009, the city’s debt had accumulated to nearly $1 billion on civic improvements, money owed to pay pension contributions, and the most generous health-care benefit in the state — coverage for life for all retirees plus a dependent, regardless of how long they had worked for the city.

More here.

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