San Bernardino creditors eye open plan process, legal issue resolution

By Caroline Salls

Pittsburgh, Feb. 10 – Two City of San Bernardino, Calif., creditors plan to ask the U.S. Bankruptcy Court for the Central District of California to “open its plan promulgation process to public view and participation,” according to a status conference report filed Monday by Ambac Assurance Corp. and Erste Europäische Pfandbrief- und Kommunalkreditbank AG in Luxemburg (EEPK).

At a status hearing scheduled for Feb. 11, the creditors said they also plan to ask the court to encourage all interested parties to present for consideration by the court all legal issues that may be resolved in advance of the city’s filing of its plan of adjustment.

“Given the apparent continuing delay in the city’s efforts to formulate a plan, it is imperative that the resolution of such issues proceed on a parallel track with the city’s efforts to formulate the plan,” Ambac and EEPK said.

The creditors said they “feel compelled to make these requests because, for the second time in three months, troubling lack of progress and significant planning failures were revealed.”

Specifically, Ambac and EEPK said the city did not explore any alternatives to charter reform until the reform failed.

Months after the court fixed a plan-filing deadline, Ambac and EEPK said creditors recently learned that the city still lacks a strategic plan. In addition, the creditors said San Bernardino has no funding plan or financial model around which to construct a plan of adjustment.

“The only identifiable step taken to date by the city toward confronting its obligations is the city’s agreement with CalPERS,” the status report said.

In November, the court set May 30 as the city’s plan-filing deadline.

San Bernardino filed for bankruptcy on Aug. 1, 2012. The Chapter 9 case number is 12-28006.

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