By Laura Mahoney
SACRAMENTO, Calif.--In a win for the City of Stockton, a federal bankruptcy judge said Jan. 30 the city does not need the court's permission to settle a lawsuit against its police force while its bankruptcy case is pending (In re City of Stockton,, Bankr. E.D. Calif., No. 2012-321118, motion to approve settlement granted in part 1/30/13).
U.S. Bankruptcy Court Judge Christopher Klein ruled from the bench that the city is not required to ask the court for approval of a $55,000 settlement with a man who sued the city alleging its police officers used excessive force on him. Klein said he will issue a written ruling on the matter soon, Marc Levinson, an attorney with Orrick, Herrington, and Sutcliffe in Sacramento, representing Stockton, told BNA Feb. 5.
The ruling applies to other city management decisions that arise during the bankruptcy proceedings, Levinson said. Stockton sought to clarify its ability to enter into the settlement, and make other day-to-day decisions, as a cost saving measure.
“The city doesn't have to run to court every time it needs to do something,” he said.
The city argued that Rule 9019 of the Federal Rules of Bankruptcy Procedure does not create a substantive requirement for the city to seek court approval of the settlement. The judge agreed, Levinson said.
Attorneys for Stockton's creditors argued in court filings that without the requirement for court approval the city would be free to evade the core provisions of Chapter 9. Those provisions include the mandate of equal treatment of similarly situated creditors, the prohibition on unfair discrimination, and the requirement that a plan be in the best interests of creditors.
The California Public Employees' Retirement System, which filed briefs with the court in support of the city, said it is pleased with Klein's ruling.
“CalPERS applauds the decision, which would allow the elected leaders in Stockton to continue to make the smart business decisions needed to protect its citizens and the valued public employees who serve them every day,” CalPERS spokesman Robert Udall Glazier said in a Jan. 30 news release.
A status conference is scheduled for Feb. 26 at the U.S. Bankruptcy Court for the Eastern District of California, in Sacramento. Klein is expected to set a schedule to hear objections to the city's eligibility for bankruptcy, Levinson said.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).