BIRMINGHAM, Alabama — The Jefferson County Commission is working to develop a bankruptcy exit plan after forming an agreement with creditors holding a majority of its $3 billion sewer debt, county attorney Ken Klee said Wednesday.
Commissioners are looking to finalize the exit plan by June 30 and present it to bankruptcy judge Thomas Bennett, Klee said.
"It's vital we meet all of the deadlines coming up. It's part of a contract. If we didn't meet the deadline the petitioners have the right to terminate the contract," Klee told WBRC-TV.
A disclosure hearing is set for August where additional details of the plan will be discussed. A confirmation hearing is set for November, when all parties involved can sign off on the plan before Bennett gives final approval.
The county's $4.23 billion bankruptcy — which includes the sewer debt — is the biggest governmental bankruptcy in American history. The county filed for bankruptcy in November 2011.
Commissioners approved agreements Tuesday with 11 creditors that hold about $2.4 billion of the county's sewer debt. The creditors hold enough of the total debt to get the deal approved in court, Klee said. The group includes JPMorgan Chase & Co., Assured Guaranty. Ltd., the Financial Guaranty Insurance Co., Syncora Holdings and several hedge funds.
The agreement calls for paying creditors about $1.835 billion instead of $3.078 billion, and Klee said JPMorgan will give up about $842 million of its overall $1.2 billion in the county's sewer debt.
AL.com reported Wednesday that the county is looking to exit the bankruptcy by Dec. 20. The bankruptcy exit plan calls for a sewer rate increase of about 7.41 percent per year for four years, and 3.49 percent after that. It's a stipulation of the exit plan that has some residents considering leaving the county.
"I got to get out Jefferson County. It's too much. Can't afford it," Juan Garcia told WBRC-TV.
"I'm as upset about the sewer rate increases as anybody. Nobody wants sewer rate increases. The fact of the matter, there is no other way to pay off the creditors," Klee said.
County Commissioner George Bowman also spoke out against the plan, saying the projected rate increases attached to it are too steep for county residents.
"'These rates will never go down. They will always continue to rise. Our people are catching hell right now paying the rates we got," he told WBRC-TV.
Information from: The Birmingham News, http://www.al.com/birminghamnews
