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Alabama County Commissioners Discuss Bankruptcy Filing

Thursday, 21 Jul 2011 01:48 PM

 

Jefferson County commissioners are meeting today with lawyers to discuss bankruptcy, according to a county staff member with direct knowledge of the talks.

Officials of the Alabama county are considering hiring Kenneth Klee, according to the person, who declined to speak on the record because the discussions are private. Klee represented Orange County, California, in its 1994 bankruptcy, the largest municipal filing. Commissioners are also meeting with Jeffrey Cohen, a Denver-based lawyer with Patton Boggs LLP, the person said.

Cohen declined to comment when reached by telephone. A voice mail left for Klee at his Los Angeles office wasn’t immediately returned.

“We’re at the end of our rope and have exhausted all our options,” said Commissioner Sandra Little Brown, who put the odds of bankruptcy at 80 percent. A filing by Jefferson County, whose creditors hold more than $4 billion in bonds, would break Orange County’s record.

The county, home to Birmingham, the state’s largest city, has spent more than three years in fiscal distress after a $3 billion sewer-bond refinancing collapsed during the credit crisis. Its woes were compounded when the Legislature refused to act after a court struck down an occupational tax in March.

Last month, the county, creditors led by JPMorgan Chase & Co., and a court-appointed receiver agreed to a 30-day respite to pursue a settlement to the debt crisis. Governor Robert Bentley said he would help broker a deal.

The county has proposed cutting the amount of debt it must repay to about $2 billion and agreeing to sewer-rate revenue increases of 8 percent for the next three years. The state would create a public utility to issue new bonds backed by sewer revenue and enhance the creditworthiness of the debt.

Previously, holders of the sewer debt and companies that insure the bonds proposed the county issue as much as $2.4 billion in refinancing bonds and raise sewer revenue more than 25 percent for at least three years.

JPMorgan had no comment, Justin Perras, a spokesman, said in an email.


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