Jump to content
House Price Crash Forum
Sign in to follow this  
Guest

Harbinger Of Muni Bloodbath: Vallejo Offers Unsecured Creditors 5 - 20 Cents In The Dollar

Recommended Posts

(Sounds like a lot of employees and retirees are goin' ta be very miffed, as it appears that reading inbetween the lines of the article their pensions were stacked with these bonds. i.e. the county took their pension contributions, swapped them for "bonds" and is now defaulting. Surely, there was a conflict of interest in a city's pension scheme buying its own bonds? Were they stuffing the pensions with these bonds when they knew the writing was on the wall?)

Who, if anyone, insures these bonds? Someone like AIG?

Edited to add:

Ah...it appears their pensions are stuffed with their own bonds

Edited by Tiger Woods?

Share this post


Link to post
Share on other sites

I note these are "unsecured" creditors.

on what is a "secured" creditor secured...Did they buy a bridge, or a municiple Police Station?

Share this post


Link to post
Share on other sites

This is a historic case. It sets the precedent for the coming probable avalanche of municipal bankruptcies in the USA. In the end most municipalities will go broke in the USA as it seems unlikely they can meet their pension obligations.

This provides an orderly procedure for the bankruptcies and seems a reasonable compromise. That the city still has a duty to provide city services, before it pays the unsecured creditors.. which include the pensioners.

Municipal bond investors can now factor in the results of this case into the future prices they are willing to pay for municipal bonds.

Bankruptcy law is one of the great strengths of America. It supercedes basically every other law. We saw last year how GM could be reborn as a very strong corporation through bankruptcy law.

Edited by aa3

Share this post


Link to post
Share on other sites

This is a historic case. It sets the precedent for the coming probable avalanche of municipal bankruptcies in the USA. In the end most municipalities will go broke in the USA as it seems unlikely they can meet their pension obligations.

UK Local Authorities that are also housing authorities may soon follow suit thanks to the outcomes of this review:http://www.ipswich.gov.uk/downloads/175_-Review_of_Council_Housing_Finance.pdf

Under reform of Council House Finance, the LAs are going to be forced by the Government to buy back the share of the housing stock that the Government technically owns. This way the Government will get Billions of Pounds, and will get th lump the debt on the Local Authority who in turn will lump it on a mixture of tenants and the Council Taxpayer.

Presumably there will be some market price rigging.

Share this post


Link to post
Share on other sites
The plan to exit bankruptcy outlines the reorganization of debt the city owes its largest creditors, Union Bank and National Public Finance Guarantee. It also sets aside a pool of $6 million to pay unsecured creditors about 5% to 20% of their claims over two years, according to court documents filed in U.S. Bankruptcy Court for the Eastern District in Sacramento.

Vallejo’s exit strategy includes restructuring the debt owed to unsecured creditors, many of which are employees and retirees, by creating a $6 million pool of cash that will be paid out over two years. They will still be able to pursue one of the city’s insurance pools to settle the liabilities, according to the documents.

$6m = 5-20% of claims?

That would mean total liability = $30-$120m. Doesn't sound right

The plan to exit bankruptcy outlines the reorganization of debt

So this is the relevant bit for the bond holders. It doesn't say what the result of that 're-organisation' is or will be.

They will still be able to pursue one of the city’s insurance pools to settle the liabilities

Ahhh............

Usual Zero Hedge 'guns, gold, god and teabaggers' slant.

Share this post


Link to post
Share on other sites

that would be colatteralised loans eg on council buildings.

so, the people own the buildings, paid for out of local taxes, then the LA decides that in order to pay the people they need to mortgage the peoples property and now they cant pay the loan back, the people lose their building and their pensions.

meanwhile.....

surely not having the building in the first place would have meant the people wouldnt have needed to be taxed to pay for it, which means they would have the money in their accounts, and they wouldnt have needed to be paid and...and ..and..

Hi finance...It screws with the mind and reality.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.