Stockton's Bankruptcy Plan of Adjustment (bankruptcy exit plan) became effective, Wednesday, February 25, 2015.
The next court date is a status conference and has been scheduled for Wednesday, February 10, 2016, 1:30p.
For information about the Court and the Court schedule, please view the Court web site listed under External Links below and view the Court calendar for Judge Christopher M. Klein.
This hearing was a Status Conference. The City shared that the Plan of Adjustment would go effective by end of day. In addition, the Judge heard a motion by the City to Amend the Judge's prior Opinion to more precisely state Franklin's recovery. The Judge subsequently approved the Motion on February 27, 2015.
Judge Klein signed the Confirmation Order allowing the City to move forward with implementing its Plan of Adjustment. The effective date of the Plan of Adjustment has not yet been determined. It can be no sooner than 14 days from the date the Judge signed the Confirmation Order.
On that same day, the Judge issued a written Opinion on Confirmation and CalPERS, which supplements his oral rulings made in court on October 1 and October 30, 2014. This Opinion was amended by the Judge on February 27, 2015, to more precisely state Franklin's Recovery.
On January 20, Judge Klein rejected Franklin's motion to stay Stockton's bankruptcy exit plan, pending Franklin's appeal.
A status conference was held on January 13. Judge Klein agreed to consider Franklin's request for stay of the confirmation order submitted to the court filed on January 7, 2015, on January 20, 2015
A status conference was held on December 10, the City provided an update and Judge Klein considered two motions by Franklin.
In the first motion, Franklin requested a stay that would prevent the City from implementing the Plan of Adjustment (bankruptcy exit plan) until the Franklin appeal is resolved. The Judge determined that it was premature to rule on that motion and deferred the matter until the next status conference, which was originally scheduled for January 7, 2015, and later continued until January 13, 2015.
The second motion by Franklin challenged the amount of money it should receive under the plan for the unsecured portion of its claim, asserting that it should be calculated based on present value. A present value calculation would have impacted the amount for individual retirees under the retiree medical settlement, as well. The Judge agreed with City on this issue and the method of calculation will stand.
On October 30, the Judge ruled that the City's Plan of Adjustment will be confirmed.
On October 1, the Judge ruled that the City's relationship with CalPERS is contractural, and that the contract can be impaired in bankruptcy. The Judge did not rule that the City must reject the CalPERS contract; the City's proposed Plan of Adjustment does not reject the contract.
At the July 8, hearing, the Judge ruled on the value of the secured portion of Franklin's claim, setting the value at $4,052,000. He also provided direction related to CalPERS and requested additional briefings from any and all parties, setting the next court date for October 1.
Chief United States Bankruptcy Judge Christopher Klein conducted a hearing on the City's Proposed Plan of Adjustment, as amended (also known as the "Exit Plan") on May 12 - 14, 2014.
At the conclusion of the hearing, Judge Klein scheduled July 8, to rule on the value of collateral provided to creditor Franklin High Yield.
The Stockton City Council approved agreements with creditors under the City's bankruptcy Plan of Adjustment, April 15, 2014, at the regularly scheduled Council Meeting, under item 15.2:
On November 18, 2013, the court approved the City's Modified Disclosure Statement and First Amended Plan of Adjustment of Debts.
At a Special Meeting on October 3, 2013, the Stockton City Council approved a Proposed Plan of Adjustment and Disclosure Statement for Submittal to Bankruptcy Court. The Plan and Disclosure Statment were filed with the court on October 10, 2013.
Periodically, the Bankruptcy Court will mail creditors and other interested parties notices of upcoming hearings and of other developments in the chapter 9 case. If you have questions about these notices, please contact the City of Stockton Public Information Officer.
On June 28, 2012, the City of Stockton filed Chapter 9 Statement of Qualifications with the United States Bankruptcy Court, Eastern District of California, Sacramento, Case No. 2012-32118. Judge Christopher M. Klein ruled on Monday, April 1, 2013, approving the petition and providing bankruptcy relief for the City of Stockton General Fund.
With the bankruptcy petition approved, the City will focus on continuing to work with creditors toward a Plan of Adjustment. The Plan of Adjustment, which must be confirmed by the court, confirms the terms and conditions of payment of debt with the limited financial resources available. The restructuring of debt and other City obligations is essential to restoring fiscal health and moving the City forward to a sustainable future.
The Stockton City Council approved a Pendency Plan on June 26, 2012. The Pendency Plan is essentially the budget and the financial plan that is followed for the day-to-day operations of the City while in bankruptcy. It identifies reduced or suspended expenditures. The City will continue to pay employees, vendors and service providers. The focus of the City's plan is the restructuring of above market pay and benefits and unsustainable long term debt.
On April 1, 2013, the Judge ruled that Stockton is eligible for Chapter 9 bankruptcy protection. The City will file a Plan of Adjustment with the bankruptcy court in September. The City Council adopted a Fiscal 2013-2014 Annual Budget as part of the City's Pendency Plan on June 25, 2013. To view this budget and budgets for prior years, please view the Budget web page.
City of Stockton Material Events Notices (MEN) are available on the EMMA (Electronic Municipal Market Access) web site. A link to the EMMA web site is provided under External Links below.
The majority of the City's budget is not impacted by the City's fiscal crisis. The total budget of $633 million includes $450 million in restricted funds, which cannot be used to resolve the General Fund crisis. The $183 million General Fund provides for services such as police, fire, libraries, parks maintenance and administrative functions. The Pendency Plan will protect these essential services for the safety and welfare of our citizens.
The State of California Legislative Analyst's Office (LAO) has published questions and answers about Local Government Bankruptcy in California. A link to the report is available under External Links below.
If you have questions, concerns, comments or suggestions, please submit your request in writing by completing an Ask Stockton service request form.
This City of Stockton web page last reviewed on --- 10/14/2015