City of Vallejo files Chapter 9 debt adjustment plan, disclosure

By Caroline Salls

Pittsburgh, Jan. 19 - The City of Vallejo, Calif., filed its Chapter 9 plan of debt adjustment Jan. 18 with the U.S. Bankruptcy Court for the Eastern District of California.

Treatment of creditors will include:

• Holders of administrative claims will be paid in full in cash;

• Union Bank certificates of participation (COPs) documents will be amended and restated as a single lease/leaseback transaction on the plan effective date, and lease payments will be guaranteed;

• The National Public Finance Guaranty Corp. series 1999 COPs claims will be settled in accordance with a settlement agreement that allows the city to make payments until fiscal year 2013-2014. If the city fails to honor its obligations, National will file a notice to intercept revenues;

• The city will assume an MPA Leasing Corp. lease with a new payment schedule that calls for reduction of the principal components of unpaid lease payments and the reduction of other lease obligations.

The city will also pay up to $20,000 to one of the lease assignees to cover attorney's fees;

• The city will continue to honor its Westamerica lease obligations and California Public Employees Retirement System pension plan obligations;

• Holders of general unsecured claims will share in distributions from an unsecured claims pool;

• Holders of the self-insurance retention (SIR) portion of general liability claims will be paid from a risk management internal service fund at the same percentage as general unsecured creditors. The insured portion of the general liability claims will be paid from an insurance pool;

• Holders of SIR claims related to Workers Compensation claims will be paid in full from the risk management internal service fund; and

• Holders of restricted revenue bond and note payable obligations claims will continue to be paid via applied revenues.

A hearing is scheduled for March 7.

Vallejo filed for bankruptcy on May 23, 2008. Its Chapter 9 case number is 08-26813.

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