Alabama county, bond trustee reach interim agreement
Thursday, February 16, 2012
BIRMINGHAM, Ala. (AP) — The Alabama county that filed the largest municipal bankruptcy in U.S. history has worked out an interim agreement with a sewer bond trustee, agreeing to pay up to $5.5 million a month and that it no longer will withhold sewer system revenues for certain expenses.
The Birmingham News (http://bit.ly/AtMwNF) reported that Wednesday’s emergency bankruptcy hearing was requested by some of the companies that insure scheduled payments will be made on the warrants. Those surety companies were facing having to make up millions of dollars this month because Jefferson County was retaining a portion of its net revenues for certain capital expenditures.
The county will pay $5.2 million on Thursday to make up for a potential shortfall in the amount of money owed to warrant holders this month, according to the agreement.
Michael Corbally, chief administrative officer for Syncora Guarantee Inc., one of the companies that requested the hearing, declined Wednesday night to comment, saying it is the company’s policy not to comment on matters involving or relating to ongoing litigation. Another company that requested the hearing, Assured Guarantee Municipal Corp. — did not immediately respond to phone and email messages from The Associated Press for comment Wednesday evening.
The county had been withholding portions of its net revenues for legal fees and capital expenditures after a bankruptcy judge ordered it could regain control of its sewer system in early January. The agreement now would permit the county to tap into $60 million in capital funds for capital expenditures. It also mandates that operating expenses will have the top priority over all expenses, including debt service, in terms of what will be paid first.
The county filed for bankruptcy over more than $4 billion in debt in December. Three years of negotiations didn’t resolve the massive debt linked to borrowing for the county’s sewer system.