Jefferson County's plan to exit Chapter 9 bankruptcy has two weeks to live or the county may have to go back to the drawing board.
The commission voted Thursday to start the clock on backing out of the plan that was negotiated with creditors earlier this year.
The county will send out a notice Thursday afternoon to its creditors that says unless it takes more action, the bankruptcy exit plan will be torn up Nov. 4.
The plan was developed this past spring and counts on interest rates for the new sewer bonds the county would have to sell being a lot lower than they are today. Since the plan was announced those rates have increased and the amount the county says it needs to upgrade the sewer treatment plants and pipes has also gone up.
In total, there is a $350 million hole between the plan and what the county actually needs to make it successful. Commisioners unanimously say they've already raised rates as high as they think the ratepayers can handle and they're not budging.
They say it's up to the county's creditors to fill in that gap with concessions, something none of those banks have been willing to do so far. Now, it's a lot like a game of chicken, with the clock running.
"I don't think people do anything 'til the last minute on negotiations. How many deals are done in the last second? We've just basically started the clock. Clock's running, we're not even in the fourth quarter...there's a two-minute warning that happened today. The time to get this deal is in the next two weeks. We're either gonna have a deal or we're gonna go to the mat," Jefferson County Commission President David Carrington said.
The county believes the banks want this Chapter 9 process to be over almost as much as they do. Commissioners Carrington and Jimmie Stephens are going to New York Monday to meet with creditors. They say meetings last week went well but now there's the pressure of the time limit.
If this pressure doesn't work, the county could enact what's called a cramdown, where they ask a judge to force creditors to accept a plan the county puts together. However, that could mean the bankruptcy would continue for another year to year and a half.
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