In June of this year, Jefferson County, Alabama began talks of filing for bankruptcy. What is expected to be the largest Chapter 9 bankruptcy case in U.S. history has now been approved. County commissioners voted 4-1 to declare bankruptcy after alternative efforts failed to reach agreement.
Behind Closed Doors
Jefferson County officials have been meeting for months now, trying to develop a plan to restructure debts and resolve issues with creditors. A proposed deal was reached in September, in which the county would resolve nearly $3.14 billion in debt owed to creditors. However, the deal fell apart after creditors refused to meet the terms of the agreement.
The proposed plan offered nearly $140 million less than originally discussed, citing economic concessions as the reason for the reduced amount. Creditors basically became unwilling to accept less than originally promised. Difficulty dealing with creditors along with the threat of further complications from a failing U.S. bond market persuaded Jefferson County officials into accepting the bankruptcy plan. County officials are hopeful that the bankruptcy filing will resolve their debt issues and allow the city to become financially functional once again.