Judge refuses to delay Stockton bankruptcy plan
A bankruptcy judge has dismissed a claim from creditors of the city of Stockton that would have kept the city in bankruptcy.
Instead, Judge Christopher Klein allowed a plan to move forward that would enable the city to pay its pension bills in full, even as a creditor challenges the decision in court.
Klein dismissed an attempt by bondholder Franklin Templeton to stay his decision from last year, approving Stockton’s bankruptcy plan which includes a full repayment to CalPERS, while reducing debts owed to other creditors, like Franklin Templeton.
Under the plan, Franklin Templeton will receive just 12 cents on the dollar for a $36 million bond debt.
The case has been closely watched across the state and across the country. Klein initially ruled that the city had the right to reduce its pension payments as part of its restructuring plan. That would have been an important legal precedent that has been long sought after by pension critics and reformers.
Instead, the final plan included full pension repayment, crushing the hopes of those who were optimistic the case would challenge the legal notion that pension payments are untouchable.