Judge Rejects Investment Firm's Appeal To City Of Stockton's Bankruptcy Plan
STOCKTON (CBS13/AP) - A federal judge has ruled the city of Stockton's bankruptcy plan will continue as planned, rejecting an appeal by a Bay Area investment firm.
City officials had successfully negotiated with creditors to eliminate more than $2 billion in long-term debt without cutting the city's pension obligations.
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Franklin Templeton was the only major creditor not to sign off on the city's settlement. The firm said the city should have cut employee pensions rather than scrub the $32.5 million it owed them. They argue the city can afford to repay more money on the municipal bonds it issued.
In October, federal bankruptcy judge Christopher Klein approved the deal, noting the city had cut employee pay and benefits, and pensions for new employees. Klein said then the bankruptcy plan did not treat Franklin Templeton unfairly.
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