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San Bernardino Can Now Make Payments to CalPERS

Bankruptcy Judge Rejects Challenge to Stop City from Making Pension Payments

May 13, 2015
The city of San Bernardino on Thursday is expected to present its bankruptcy exit plan to the San Bernardino City Council.
 
This action will come on the heels of U.S. Bankruptcy Judge Meredith Jury dismissal of a lawsuit that sought to block the city from making its full pension payments to CalPERS. May 30 is the deadline for the city to file its plan with Judge Jury.

A May 12 Sacramento Bee article included the following statement from the pension agency: “The judge in this case has ruled appropriately,” said the California Public Employees’ Retirement System in a prepared statement. “Now the city can turn its attention to the more pressing matter of completing its plan of adjustment for exiting bankruptcy.”
 
The city of San Bernardino filed for federal bankruptcy protection in 2012. The fall 2014 announcement by the city that it would make its full payments to CalPERS sparked litigation by two creditors — Ambac Assurance Corp. and EEPK, a bank based in Luxembourg — which the city owes a total of $59 million. The creditors charged that the city’s debt to bondholders should be treated the same as its debt to CalPERS. That argument was rejected in a similar action in the Stockton bankruptcy case. Federal Bankruptcy Judge Christopher Klein ruled in October 2014 that Stockton could make full payments to CalPERS.


 
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