On October 30th, Chief Bankruptcy Judge Christopher Klein of the United States Bankruptcy Court for the Eastern District of California in Sacramento orally confirmed the chapter 9 plan of adjustment filed by our client, the City of Stockton (population 300,000). The confirmation ruling followed extensive briefing and motion practice as well as five days of trial, with testimony from more than a dozen lay and expert witnesses. Though work remains, including a possible appeal by the creditor that opposed confirmation, the ruling brings Stockton closer to ending its chapter 9 bankruptcy case, which it filed in June 2012.
The confirmed plan incorporates settlements with all but one of the City’s major creditors, including the two monoline insurers that vigorously contested Stockton’s eligibility for bankruptcy relief in March of 2013. In addition, all nine of the City’s unions agreed to new collective bargaining agreements that included substantial compensation reductions, and retirees voted overwhelmingly for the plan, which included the elimination of approximately $545 million of health benefits in return for retaining pension benefits. Implementation of the plan was made possible by the November 2013 passage of Measure A, a sales tax increase approved by the Stockton electorate.
The Orrick team advising Stockton was led by restructuring partner Marc Levinson (SC) and public finance partner John Knox (SF), and included Norm Hile (SC), Jeff Hermann (LA), Bob Loeb (DC), Pat Bocash (SC), Devin Brennan (SF), Dustin Calkins (SF), Chris Cariello (NY), Lesley Durmann (SC), John Farmer (LA), Emmanuel Fua (SC), Joanna McDonald (NY) and J.R. Riddell (SC). Of invaluable assistance to the team were Betty Orozco (SC), Tami Gore (SC), Shelley White (SC), Trudy Harris (WH) and Patrick Justesen (LA).