A financial bombshell fell in federal bankruptcy court in Birmingham Friday.
During the hearing for increasing sewer rates on Jefferson County sewer customers, an attorney for the Bank of New York Mellon announced the trustee of the warrant indenture for the county's sewer debt announced the bank would not make the February payment to warrant holders.
The warrant holders purchased to warrants as an investment and the money generated would help pay for improving the county's sewer system. Jefferson County Manager Tony Petelos says this will not affect sewer customers in Jefferson County.
"This is big in the financial market. As far as the ratepayer it doesn't affect them at all. We will continue to sent the net revenue to the trustee," Petelos said.
The county manager says the county is in bankruptcy and it protected from legal action by the creditors.
Petelos says the county has been and will continue to make payments on its' sewer debt to the trustee. The county is paying on principal and not the escalating interest.
The attorney for New York Mellon is asking U.S. Judge Thomas Bennett for direction on how to proceed. The attorney also asked for an acceleration of payment of the entire $3 billion debt rather than to continue to spread it out over a number of years.
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