BGA IDEA FORUM: MUNI BANKRUPTCY
Panel of experts offer differing views on a controversial financial strategy.
It’s a topic that has been widely discussed in the media and across Illinois, with most specifics left unaddressed and many questions left unanswered.
Because of these outstanding questions and in light of the financial crises facing Illinois and its municipalities, the Better Government Association hosted "Municipal Bankruptcy: Is Your Hometown or School District the Next Detroit?" on Wednesday, June 3, 2015.
Broadcast live on CAN TV, the event featured an expert panel representing a range of viewpoints: James Spiotto, bankruptcy attorney and co-publisher of MuniNetGuide.com; Carole Neville, lawyer for Dentons Municipal Reform and Restructuring Group and Counsel to the Detroit Retiree Committee; Hon. Larry Morrissey, Mayor of Rockford, IL; and Saqib Bhatti, Director of the ReFund America project. BGA Senior Policy Analyst Alden Loury moderated the discussion, which was held at the Union League Club of Chicago.
The conversation opened with a primer on the basics of Chapter 9 municipal bankruptcy. Detroit’s bankruptcy proceedings were discussed at some length, both in terms of its mechanics and the lessons to be learned by Chicago and other struggling municipalities.
The panelists debated the merits of a bill pending in the Illinois General Assembly that would authorize municipalities to file for Chapter 9 bankruptcy, whether Illinois municipalities have sufficient revenue and resources, and how a municipality should address enormous pension obligations and municipal bond debt with or without the option to file for bankruptcy.
Despite the panelists’ ranges of opinion, there was consensus amongst them that regardless of whether Illinois passes a law authorizing municipal bankruptcy, great care must be taken to engage and consider the perspectives of a wide range of stakeholders, including bondholders, retirees, labor, taxpayers and elected officials.
The BGA policy team regularly hosts idea forums to promote conversation amongst key stakeholders about important policy issues.
BGA's Robert Reed Talks Municipal Bankruptcy On Chicago Tonight
"Ten Considerations for Financially Distressed Local Governments and Public Authorities" - Provided by Carole Neville
"Restructuring, Insolvency and Bankruptcy Experience" - Provided by Carole Neville
"Our Kind of Town: A Financial Plan that Puts Chicago's Communities First" - Provided by Saqib Bhatti, report by Saqib Bhatti and Carrie Sloan