City of San Bernardino Reaches Final Stage of Bankruptcy Case


Last week, San Bernardino city reaches to the final stage of its bankruptcy case hearing in the U.S. Bankruptcy Court. It is a moment for which numerous creditors of the city have been anticipating for more than four years. The hearing, as the city administration hopes, will further strengthen the city’s status of not being bankrupt since last March. The bankruptcy case of the city of San Bernardino was initially heard back in 2012. Since then, almost every court seat has been occupied during all the hearings in the past four years; half by city officials, San Bernardino’s lawyers, and consultants while the other half was occupied by those officials who have defied the city’s plans. City officials, who were seeking a plan which pays one cent per dollar owed to every creditor, were somehow confirmed in last Friday’s hearing.

According to U.S Bankruptcy Judge Meredith Jury, the city has already fulfilled most of the necessary steps to go ahead with its plan and does not need to be worried about later hearings. However, the jury held their judgment on the two most significant problems with the city’s bankruptcy case. One issue is related to a disagreement between the Big Independent Cities Excess Pool and San Bernardino, the former provides insurance coverage for the city itself. The other issue is more related to the current controversy in connection with the city’s Police’ excessive use of force.  The official court spokesperson said that these two major issues will be heard in this November.

San Bernardino’s bankruptcy attorney, Paul Glassman, said on the Friday’s hearing that the city has made great progress since its initial hearing back in 2012 in ridding its “bankrupt” status. “The very first hearing in this case back in August of 2012, I told the court that the day that the city entered Chapter 9 (bankruptcy) was a solemn day,”. He further stated, “But since that day the city has come a long way down a difficult path and has made great strides forward, thanks to the efforts of a number of people, many of whom are in the courtroom today. I can now say that today is a promise and hope for a better future for the city.”

On the judiciary’s part, they also happened to appreciate the progress city has made since 2012 in restructuring its finances and the plan they propose of one cent per dollar owed is currently the most feasible city can offer its unsecured creditors. No one in the courtroom objected to this plan as well.

The city of San Bernardino filed for Chapter 9 bankruptcy protection on August 2, 2012, with a debt rising more than $45 million. This amount was 40 percent of what the city will earn in revenue this year. This is why the city’s attorney argued in the court to order the creditors not to collect their debt fully or otherwise the city would face another financial collapse and will not be able to roll out all the payroll it has.  Almost an amount of $18.8 million has been spent on the city’s bankruptcy case since 2012 till 2016. While these expenses incurred, the city of San Bernardino has also benefited in the long run for securing a plan for themselves which does not impede the city’s chances of future growth.


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