Stockton creditors refute bad faith findings, request ruling changes

By Caroline Salls

Pittsburgh, April 12 - Stockton, Calif., capital markets creditors Assured Guaranty Corp. and Assured Guaranty Municipal Corp. are asking the U.S. Bankruptcy Court for the Eastern District of California to amend two findings made as a part of the city's Chapter 9 eligibility ruling, according to a Friday court filing.

Specifically, the entities said the court claimed that they "acted as a stone wall" during negotiations with the city and did not negotiate in good faith under section 53760.3" of the California Government Code.

"The court's findings as to the lack of good faith by Assured are not supported by the evidentiary record and directly contradicted by uncontroverted evidence," the entities said in their motion.

"The city at several points acknowledged and submitted its own evidence of the capital markets creditors' good faith in negotiations."

In addition, the Assured entities said they participated in good faith settlement discussions with the city.

"Such discussions are the essence of negotiation and demonstrate that a party is interested in fashioning a resolution that serves all parties' interests," the motion said.

"They stand as uncontroverted evidence that Assured negotiated in good faith."

As previously reported, the court ruled on April 1 that Stockton is eligible for Chapter 9 bankruptcy.

A hearing on the proposed ruling amendments is scheduled for May 21.

Stockton filed for bankruptcy on June 28, 2012 under Chapter 9 case number 12-32118.

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