Mammoth Lakes, one the three California cities to declare bankruptcy in the past two months, has reached a settlement with creditors.
The resort town announced on Wednesday that they settled a $43 million court judgment awarded to a contractor over a property dispute, according to Reuters.
The town had been involved in a legal dispute with Mammoth Lake Land Acquisition LLC since 2006.
The details of the settlement will be confidential until it can be fully documented and executed. The town will hold a public meeting to determine how to finance the settlement.
Litigation between the parties in the bankruptcy case will be put on hold although they will have to meet key deadlines.
Mammoth Lakes filed for Chapter 9 bankruptcy citing the legal dispute as one of their primary reasons for insolvency. The unusually warm winter compounded their financial problems which decreased the amount of tourists visiting the ski resort town.
Mammoth Lakes along with San Bernardino and Stockton made risky bets on land development. That along with the unemployment rate and inordinate number of foreclosures sent the cities spiraling deeper into debt. These cities felt that Chapter 9 bankruptcy was their only option.
Recently rating agencies and analysts predict that a more California cities are facing bankruptcy. This is a terrible position to be in as a city leader, but given no other alternative an experienced bankruptcy attorney can help them emerge from the process. A bankruptcy can shield the debtor from their creditors while they work on improving their finances.
