Vallejo's Chapter 9 debt adjustment plan confirmed despite objections

By Lisa Kerner

Charlotte, N.C., July 28 - The City of Vallejo, Calif.'s second amended Chapter 9 plan of debt adjustment was confirmed by the U.S. Bankruptcy Court for the Eastern District of California on Thursday, according to an attorney close to the case.

Creditors Ana Menjivar and Wynathen Ketchum had objected to the city's proposed plan and asked the court to dismiss the city's Chapter 9 bankruptcy case.

As previously reported, treatment of creditors will include:

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

• Union Bank will receive new lease/leaseback obligations in exchange for cancellation of its certificates of participation;

• 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, and the insurer of the 1999 COPs will receive reduced and restructured payments through the 2024-2025 fiscal year;

• 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 reduced and restructured payment will be made through the 2019-2020 year;

• 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 a $6 million unsecured claims pool; and

• Holders of general liability claims will recover 20% to 30%.

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

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