Bankruptcy, Bankrupt City | featured news

This Gold Rush-era port city, an epicenter of California's agricultural exports, will become the nation's largest city to seek protection under the U.S. bankruptcy code after its City Council on Tuesday stopped bond payments, slashed employee health and retirement benefits and adopted a day-to-day survival budget.

Stockton, the California city with the nation's second-highest foreclosure rate, is facing a moment of decision on whether to become the biggest city to file for bankruptcy, as a deadline for talks between the city and its creditors approached late Monday.

Court battles with employees and lenders that could stretch over years is likely to await Stockton, Calif., if it becomes the largest U.S. city ever to file for bankruptcy.

Stagnant revenue and rising employee costs threaten City Hall with a $222-million shortfall, official says. A proposal to outsource ambulance services provokes anger from firefighters union. Los Angeles' top budget official raised the specter of bankruptcy Friday in a sweeping report that calls for new taxes, possible layoffs and the privatization of some city services.

Pennsylvania’s financially distressed capital city is seeking Chapter 9 bankruptcy, citing overwhelming debt, but Harrisburg’s mayor and top city lawyer said the filing signed by a City Council member was not legal. The petition docketed by U.S. Middle District bankruptcy court Wednesday listed about $458 million in creditors and claims, and said the city faced “imminent jeopardy” from six pending legal actions by creditors related to a debt-saddled trash incinerator.

The city of Central Falls, Rhode Island — one of a handful of U.S. cities and counties facing fiscal collapse in the wake of the economic recession — has filed for bankruptcy.

In a highly unusual move, the city of Harrisburg says it will not make a $3.3 million payment.

The economic slump is forcing debt-laden cities and towns to consider using Chapter 9. The bankruptcy option is causing experts to worry about the safety of municipal debt.