California may bar city bankruptcies

CNN Money ^ | 06/02/2010 | CNN Money

[The Magical Mischief Tour]

NEW YORK (CNNMoney.com) -- A bill that clamps down on municipal bankruptcy filings is headed for Gov. Schwarzenegger's desk, which is bad news for Los Angeles and other cash-strapped California cities.

It the governor signs Assembly Bill 155, it would place a hurdle in the path of filing for Chapter 9 municipal bankruptcy. The bill stipulates that a city may only file for bankruptcy with the approval of the California Debt Investment Advisory Commission, which provides information on debt to public agencies.

[Uncle Ike]

What’s the alternative for these cities?? Default, lock the doors, and go out of business??

[The Magical Mischief Tour]

Yeah.. exactly.

[rightwingcrazy]

Handing over the keys to union leaders, along with a taxpayer bailout. A tried and true formula.

[Mike Darancette]

And here I thought that Bankruptcy was a Federal filing.

[cdcdawg]

This could raise an interesting constitutional question. Can a state bar or inhibit a municipality from filing under the federal bankruptcy statute? Very interesting.

[mainsail that]

“This could raise an interesting constitutional question. Can a state bar or inhibit a municipality from filing under the federal bankruptcy statute? Very interesting.”

Does CA get stuck with the bill if they file ? US can probably place some hurdles on states filing for bankruptcies.

[Snickering Hound]

http://en.wikipedia.org/wiki/Chapter_9_bankruptcy

[Clock King]

Yep. Keep working until the money runs out. When the commissars, judges, and others don’t get their paycheck, then they will pay attention.

[ClearCase_guy]

This really is like King Canute and the tide coming in. Is the government powerful enough to change reality?

Health care reform might be a great success if the government would just bar people from dying.

[seowulf]

What’s the alternative for these cities?

Unincorporate and cease to exist. The dead have no debts to men.

[Lancey Howard]

California is one hilarious place.

[Hoodat]

While they’re at it, why not pass a law banning unemployment?

[pogo101]

Almost certainly a violation of the Supremacy Clause. Bankruptcy is controlled exclusively by federal law; no state or local government may pass a law adding additional burdens to any would-be debtor.

[Lancey Howard]

Health care reform might be a great success if the government would just bar people from dying living past the age of 50.

There.

[count-your-change]

The California Legislature today passed a bill declaring all California cities solvent with a cash surplus.
Los Angeles city government heaved a collective sigh of relief knowing their financial problems were over and they could go on spending as before.