One short month ago, when the Jefferson County, AL commissioners sat down to vote on whether or not to file for Chapter 9, they decided to delay the vote by a month. Until today. Follow along as the final vote takes place, only this time the expectation is that the commissioners will agree to the proposed reorganization as JPM and other creditors have agreed to substantial concessions of $750 million of the total $1.1 billion loan. Naturally, if this settlement is rejected, the county will declare bankruptcy. Incidentally, what Jefferson County has shown the world is that a market test on real manageable LTV on muni debt is about 70% lower than currently marked. To Meredith Whitney's Chagrin, however, most municipalities will use up all their cash first before acknowledging reality and pushing for comparable hard line negotiating tactics with creditors.
Some more from Bloomberg:
JPMorgan Chase & Co., which arranged financing for most of the sewer debt that threatens to bankrupt Jefferson County, Alabama, is set to offer as much as 70 percent of the concessions from creditors to ease the county’s fiscal crisis.
JPMorgan would make about $750 million of about $1.1 billion in concessions under a proposal the county’s five commissioners plan to vote on today, said Commissioner Joe Knight in an interview yesterday. If the settlement is rejected, the county may declare what would be the biggest municipal bankruptcy in the U.S.
The size of JPMorgan’s offer was confirmed by a second person familiar with the negotiations, who requested anonymity because the talks are continuing. The remaining amount of about $350 million will be split among banks that provided credit lines for the debt, bond insurers and investment funds.
JPMorgan, which managed the county’s sewer refinancings in 2002 and 2003, holds about $1.2 billion of the county’s $3.1 billion sewer debt, the person said.
Issues blocking a settlement over the sewer debt have been resolved, Jefferson County Commission President David Carrington said.
All great. The only problem is that Jeffco doesnt have the money to even pay a 70% haircut loan.