Chapter 9 Flashcards
1
Q
When can a municipality file for bankruptcy?
A
Has to prove insolvency, specific state authorization, and an attempt to renegotiate with creditors
2
Q
Why does the debtor in a ch 9 have more leverage than a debtor in a ch 11?
A
No shareholders, so the unsecured are the bottom tier
Debtor has permanent exclusivity on proposing a plan
Politicians can never be removed regardless of incompetence
No 1113 to restrain the rejection of union contracts
3
Q
What are the jurisdictional issues of municipal bankruptcies?
A
the state must specifically authorize the municipality to file
Court cannot limit use/sale/lease of property unless the debtor wants to
Court cannot limit spending or raise taxes even if the programs are wasting money
