Municipal Time for Chapter 9
Chapter 9 of the bankruptcy Code is intended for reorganization of municipalities including cities, towns, villages, countries, taxing districts, municipal utilities and school districts. It also includes revenue-producing bodies such as highway, bridge and gas authorities.
There have been fewer than 500 municipal bankruptcy petitions filed during the last 60+ years.
A Different Breed of Bankruptcy
Although similar to other chapters, Chapter 9 is significantly different in that there is NO provision for liquidation of the municipality assets or distribution of the proceeds to creditors.
Who Can File For Chapter 9?
Only a municipality may file for relief under Chapter 9. The term “municipality” is defined in the Bankruptcy Code as a political subdivision or public agency or instrumentality of a State.
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