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Reconciling The Municipal Pension Problem With Chapter 9'S Automatic Stay: A Case Note On In Re City Of San Bernardino, Michael Simon

The Journal of Business, Entrepreneurship & the Law

Using In re City of San Bernardino as a springboard, this Note explores both the descriptive and analytic dimensions of a municipality seeking relief from its pension woes within the context of Chapter 9 of the Bankruptcy Code. As a descriptive matter, this Note illustrates that municipalities need alternative solutions to address the growing public pension problem besides issuing municipal bonds. Given the structure of certain public defined benefit pension systems, the strategy of issuing municipal bonds to raise cash has substantial disadvantages. In certain contexts, Chapter 9 of the Bankruptcy Code provides a significantly better alternative. Unlike a business …