Talking Bankruptcy Again

City Hall Bk

Talk of municipal bankruptcy has been in the air since U.S. Bankruptcy Judge Michael McManus ruled last month that the city of Vallejo, which filed for Chapter 9 bankruptcy protection in May 2008, has the authority to void its existing union contracts.

The judge contended that Congress did not extend the same projection to public employees that it did to those working in the private sector under Chapter 11 bankruptcy rules.

Cities, McManus said, have broader authority to break existing union agreements than private companies.

Talking Bankruptcy Again