Jefferson County officials said Thursday morning they are "close" to filing a bankruptcy exit plan that would get the county out of Chapter 9 bankruptcy by the end of 2013.
Kenneth Klee, the lead attorney in the case, flew in from California to represent the county in a bankruptcy hearing Thursday.
The county's creditors say that December 2013 goal to be out of the nation's largest-ever municipal bankruptcy is too optimistic, but the county's lead outside lawyer today says he thinks it's very realistic.
Klee said "substantial progress" had been made with many of the parties and announced the county has a deal with bondholders based on a 2001 general obligation.
It's believed that will include knocking at least $1 billion off the more than $4 billion the county owes, and it won't depend on any help in terms of new tax revenue from the state legislature.
"What the disclosure statement does is it tries to lay out, in clear and simple English how people are going to be treated," Klee said. "What they get if they vote for the plan, what they get if they vote against it."
Klee said he hopes to approve the plan by next week. He also requested that the status conference be held over until June 5, the next hearing date.
The county also announced Thursday it's reached a deal with creditors on its $1 billion dollars worth of general obligation bonds, and hopes to vote on that deal as early as next week.
The bankruptcy exit plan is based on no new revenue or taxes. The county isn't counting on help from the state legislature but is hoping for support once they're out of bankruptcy.
It's also close to agreement with its biggest sewer creditors: JP Morgan and hedge funds, and is working with its monoline insurers.
"They're 3 insurers and a New York regulator who have to come to agreement and I'm optimistic we can get there, but we're not there yet," Klee said.
If the county can get them on board, along with the bond insurers, than it would be able to hold a hearing on its exit plan in August, then send that plan to individual creditors for a vote in September, and hope to have a final confirmation hearing in late October or early November.
If that goes smoothly, the county would exit bankruptcy sometime in December.
But if the county can't get a majority of its creditors to sign off, the plan becomes known as a cram-down. In that case, creditors would be forced to take big cuts in what they're owed and the timeline developed Thursday would be delayed.
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