Attorneys have filed a plan to get Jefferson County out of the biggest Chapter Nine bankruptcy in the country's history.
According to the plan, sewer rates will go up, but this is not just to pay off the debt, but to fund future capital and operating expenses. People are looking at four increases at 7.4%.
The long term forecast for inflation is at 3.5%. The billion dollars owed for the school tax debt will still have to be paid. The county is walking away from the three billion dollar sewer debt.
County Commission President David Carrington says this is the right step in getting back on track.
"It's been trying, difficult, frustrating. Two steps forward, one step back. We are confident our plan is fair to the citizens of Jefferson County and creditors and hopefully we will get it approved, sell some new bonds, be out of this by the New Year," said Carrington.
From here there will be a disclosure hearing in August. If someone doesn't agree with this plan, they can voice their concerns then. In November, the judge will rule whether to accept this plan or not. If accepted, Jeffco will start selling off debt.
Carrington released a statement about the plan on Sunday:
Jefferson County's Plan of Adjustment provides the County with much needed debt relief. The Plan eliminates more than $1.2 billion of sewer debt and saves the citizens millions of dollars in general obligation and school warrant debt.
The Plan solves both of the problems that prompted the Commission to file the largest Chapter 9 bankruptcy case in U.S. history: (1) more than $100 million of general obligation debt had become immediately due and payable and could not be repaid; and (2) a massively large, unsustainable sewer debt would have required sewer rate increases much, much higher than the negotiated rates included in the Plan. The realization of these significant benefits is only possible because of the tools that are available in the context of a bankruptcy case, as well as the crucible for negotiation and settlement that is a part of the bankruptcy process.
The Plan is largely consensual and was negotiated in good faith with a broad range of sewer, general obligation, and school warrant creditors. The Plan consists of numerous, interlinked, and highly complex settlements, compromises, and concessions. All of the various sewer creditors (the monoline insurance companies, the liquidity banks, the hedge funds, and particularly JPMorgan) will be getting far less than a full recovery. Every part of the settlement is the product of very intense, hard-fought, arms-length negotiations. All major stakeholders in the case are or are expected to be supportive of the County's Plan of Adjustment.
The Plan resolves litigation that has been pending for years and has already cost the County millions of dollars. Under the Plan, more than 10 different pieces of litigation pending in at least 6 different courts will be resolved with finality. Without the Plan, all of this litigation (and many other potential pieces of litigation) could drag on for years, cost the citizens of Jefferson County millions of additional dollars in legal fees, and carry great uncertainty and risk about the ultimate result. The Plan achieves the fundamental bankruptcy purpose of giving Jefferson County a "fresh start" – allowing the county to put "the sins of the past" behind us so that the Commissioners can shift our focus to creating a brighter future for our children and grandchildren.
The Disclosure Statement provides additional information about the County and the County's Plan of Adjustment. Judge Bennett will hold a hearing on August 6 to determine whether he will approve the Disclosure Statement. Once approved, it will be circulated to creditors who will vote whether to accept or reject the Plan, prior to a confirmation hearing on the Plan in November. All interested parties, including members of the public, have open access to the Plan and will have months to evaluate it. All parties in interest will have a full and fair opportunity to present any objections to the Plan and have their positions considered by the Bankruptcy Court. On behalf of the County, Commissioners Stephens, Knight, Brown and I believe the Plan is fair, equitable, lawful, appropriate and in the best interests of the County, its citizens and the creditors. We are confident that conclusion will prevail at the confirmation hearing in November.
The Plan and Disclosure Statement are available at the following link - www.jeffersoncountyrestructuring.com - by selecting Chapter 9 Plan & Related Documents in the upper left corner.
Copyright 2013 WBRC. All rights reserved.
1720 Valley View Drive