Introduction -
In May 2008, the City of Vallejo, California, filed for protection under chapter 9 of the United States Bankruptcy Code, followed in 2011 by Jefferson County, Alabama, in 2012 by the City of Stockton, California, and the City of San Bernardino, California, and by Detroit, Michigan, in 2013. No significant city or county filings have occurred since then, but municipalities1 have been increasingly squeezed between the cost of providing basic services and flat or declining revenues. While many were able to avoid severe fiscal distress or insolvency by their receipt of federal funding in connection with the COVID-19 pandemic, those grants are in the past; and some municipalities are once again experiencing the strain of increased costs while managing revenue streams that have not fully recovered. In the face of such pressures, the possibility that some may want or need to seek chapter 92 protection has increased.
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