San Bernardino's Chapter 9 eligibility ruling challenged by CalPERS

By Jim Witters

Wilmington, Del., Oct. 23 - The court ruling on City of San Bernardino, Calif.'s eligibility to be a Chapter 9 bankruptcy debtor is being appealed by the California Public Employees' Retirement System (CalPERS), according to an Oct. 22 filing with the U.S. Bankruptcy Court for the Central District of California.

Judge Meredith A. Jury granted the city's request for summary judgment and denied CalPERS' challenge in an August ruling and a Sept. 17 written opinion.

The city said it meets the legal requirements for bankruptcy, including:

• San Bernardino was insolvent when it initiated the bankruptcy case;

• The city wants to complete a plan of adjustment of its debts;

• Negotiations with all of its creditors was "impracticable," and the San Bernardino Public Employees Association and CalPERS conceded that the city satisfied its legal requirements and waived any objection by failing to file a timely objection to the city's eligibility on this basis; and

• The city filed its petition in good faith.

San Bernardino filed for bankruptcy on Aug. 1, 2012 in the U.S. Bankruptcy Court for the Central District of California. The Chapter 9 case number is 12-28006.

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