Stockton creditor denied motion to reduce $545 million retiree claims

By Kali Hays

New York, Dec. 16 – Creditors of the City of Stockton, Calif., Franklin High Yield Tax-Free Income Fund and Franklin California High Yield Municipal Fund, were denied a request to reduce the amount of retiree health benefit claims in the city’s confirmed plan, according to a Dec. 16 filing with the U.S. Bankruptcy Court for the Eastern District of California.

Specifically, Franklin asked that the court reduce the aggregate of allowed retiree claims to $261.9 million from the $545 million allowed under the plan.

Franklin claimed that the court did not make any findings of fact to support its agreement to the retiree claims amount and did not accept arguments on the issue.

As previously reported, Stockton received confirmation of the plan Oct. 30.

Franklin has a combined claim of $35 million against the city and opposed confirmation of the plan, arguing that creditor treatment under the plan in inequitable.

The adjustment plan allows Franklin to recover about $4 million of its claim while current pensions of city workers stand to be paid in full.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.