Alabama County Goes Really, Really Bankrupt
Posted on Nov 9, 2011
Hey, anyone want to bail Alabama out? More specifically, Jefferson County in the Heart of Dixie, which includes the fair city of Birmingham and is also a gobsmacking $3 billion in the hole from a botched sewer deal.
And hey, guess who’s not bailing Jefferson County, Ala., out? Lurking in the background of this tale of financing gone awry is the county’s main creditor, JPMorgan Chase & Co., but the firm insists it did everything possible to forestall the bankruptcy filing that ultimately happened Wednesday. Its big-banking best just wasn’t good enough. —KA
The Wall Street Journal:
Commissioners in Jefferson County, Ala., which owes more than $3 billion on a failed sewer deal, filed Wednesday for what would be the largest municipal bankruptcy in U.S. history after a tentative rescue plan with creditors unraveled.
The county’s five commissioners voted 4-1 to file the bankruptcy, two people in attendance at the meeting said. Commissioner George Bowman placed the dissenting vote, one said.
Jefferson County has been struggling since 2008 under the weight of the sewer debt, the result of soured bond financing. It is the most populous county in Alabama and home to Birmingham, one of its economic hubs.
[...] A spokesman for J.P. Morgan Chase & Co. (JPM), the county’s largest creditor, said the bank had worked “very hard” with the county and other creditors to avoid a filing, offering “substantial financial concessions to make the deal happen.” He added that the bank “will continue to work toward a fair and reasonable solution for the county and all creditor constituents involved.”