On October 30, 2014, Chief Bankruptcy Judge Christopher Klein of the United States Bankruptcy Court for the Eastern District of California in Sacramento confirmed the chapter 9 plan of adjustment filed by Orrick client, the City of Stockton (population 300,000). Stockton exited bankruptcy on February 25, 2015, having completed the documentation of a number of complex financial transactions and having defeated a motion to stay the confirmation order pending an appeal.
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 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 eliminated approximately $545 million of health benefits in return for the City 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), J.R. Riddell (SC), Pat Bocash (SC), Devin Brennan (SF), Dustin Calkins (SF), Chris Cariello (NY), Lesley Durmann (SC), John Farmer (LA), Emmanuel Fua (SC), Ari Grey (SF), and Joanna McDonald (NY). Of invaluable assistance to the team were Betty Orozco (SC), Tami Gore (SC), Debbie Knox (SF), Michelle Bergland (SF), Shelley White (SC), Trudy Harris (WH) and Patrick Justesen (LA).