Alabama county approves bankruptcy filing

REUTERS: Despite a tentative deal with creditors reached in September to settle $3.14 billion of debt, county commissioners this week resurrected the threat of a Chapter 9 bankruptcy filing largely because the estimated savings from the September agreement had shrunk by about $140 million.

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  1. 1
    pete4tide

    It just makes me so damn proud! Love seeing JeffCo make history once again, and this time it didn’t involve fire hoses or bombing churches.

  2. 3
    # 1 al. fan

    Can somebody out there please explain to me just why this debt is so large! No fancy words or stuff like that, but just what caused all this mess in the first place. I have my own ideas, but I could be wrong. Just what started all this in the first place? Thanks……

    • 4
      capstonereport

      The county was forced to upgrade its sewer and then while doing so, many of the groups that forced the upgrade sued to stop it because it went under a river. So, Jefferson County borrowed lots of money for sewer upgrades that never were completed. But that is just background on the county’s management.

      Then, the debt was structured in such a way that much of it wasn’t in typical bonds, but in much more dangerous and exotic forms of finance. In other words, the county picked something like adjustable rate mortgage instead of a fixed rate mortgage. That isn’t a perfect comparison, but I think it fits.

      As the economic conditions worsened, fewer people wanted to hold the county’s debt and the interest rates spiked. The county couldn’t afford the newer rates and was holding way too much debt.

      I’m sure this isn’t a perfect explanation, but I think it fits.

  3. 5
    # 1 al. fan

    Thanks Cappy!! That pretty well sums it all up as far as I’m concerned. But just a footnote or two here, it sounds to me like some body got a pretty nice kickback but then….. thems just my observations….. thanks again…

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