Judge Gives Jefferson County approval for bankruptcy

Birmingham, AL- A federal bankruptcy judge in Birmingham has given Jefferson County approval to go forward with Chapter 9 debt protection, which will be the largest municipal bankruptcy in history.

U.S. Bankruptcy Judge Thomas E. Bennett issued the order late Sunday overruling Wall Street Claims that state law did not permit Jefferson County to file the case, according to the Washington Post. JP Morgan Chase and other creditors said their bankruptcy was invalid because their debt was is in warrants and not in bonds.

Jefferson County, the largest in Alabama, is attempting to resolve $4 million in debt borrowed to improve the sewage system.

The 11^th U.S. Circuit Court of Appeals is looking into another issue related to the bankruptcy and will also review Judge Bennett’s decision.

Jefferson County filed for Chapter 9 bankruptcy last November when negotiations with creditors unraveled. The county has been plagued with the sewer debt, political corruption and the loss of a local jobs tax. Some municipalities have no other alternative to their debt issues than to retain a bankruptcy attorney and seek protection from creditors.

In the ruling Judge Bennett said Jefferson County “is insolvent, desires to effect a plan of adjustment of its debts and has negotiated in good faith,” according to Reuters.

Any company faced with financial insolvency can get the advice of an accomplished bankruptcy lawyer to offer solutions to their overwhelming debt. After looking into a business’s financial affairs, a bankruptcy attorney can determine which type of bankruptcy filing is appropriate for their needs.