Bankruptcy, Bankrupt City | featured news

Stockton and San Bernardino, the two California cities that have filed for bankruptcy protection, are both considered test cases in the epic battle over whether municipal bondholders or pensioners will absorb most of the pain when a government goes broke.

Detroit is in a state of financial emergency, Michigan Gov. Rick Snyder (R) said Friday. "There's probably no city that's more financially challenged in the entire United States," said Snyder. "We need to start moving upward with the city of Detroit." Mayor Dave Bing has a 10-day period in which he can request a hearing, after which point, according to the Associated Press, Snyder can appoint an emergency financial manager for the city or revoke his decision.

At the Detroit Auto Show earlier this month, luxury was in the air. Pricey new Bentleys and Maseratis glittered - including a Maserati 2014 Quattroporte with a $132,000 price tag; U.S. Cabinet Secretaries and dignitaries rubbed shoulders; and many of the well-heeled attendees ponied up for a $300-a-ticket black-tie charity ball.

San Bernardino must cut government spending by a third, almost assuredly resulting in widespread layoffs or pay reductions for city workers, as it prepares to officially file for bankruptcy protection, city officials said.

San Bernardino leaders' decision means the city could avoid months of state-mandated mediation as it seeks bankruptcy protection. The San Bernardino City Council on Wednesday declared a fiscal emergency, an acknowledgment that the city is nearly broke and a legal maneuver that will allow leaders to file for bankruptcy protection without going through months of state-mandated mediation.

The Sheriff's Department said Thursday it was working with police and the district attorney's office to investigate possible criminal activity within the government of San Bernardino, where city officials voted this week to take the rare step of filing for bankruptcy.

The San Bernardino City Council votes to file for bankruptcy. Facing a $45-million budget shortfall and the prospect of not being able to pay city workers, the panel Tuesday voted to file municipal bankruptcy, the third California city to do so in recent weeks.

SAN FRANCISCO (Reuters) - Mammoth Lakes, California filed on Tuesday for Chapter 9 bankruptcy protection from its creditors due to a nearly $43 million legal judgment against it.

The man in charge of the biggest U.S. city ever to file for bankruptcy is clear about the root of the crisis. It was a decision that gave firefighters full healthcare in retirement starting on January 1, 1996, said Bob Deis, the city manager of Stockton, California.

Stockton, California, the largest city in the United States to ever file for bankruptcy, could create a new template for struggling cities and potentially lift the stigma that scars municipalities if they seek court protection from creditors.