DEALING WITH DISTRESS: ONE SIZE DOES NOT FIT ALL

Although the prediction of massive municipal default never came to pass in 2011, there were several noteworthy Chapter 9 filings.  Further, the impact of the economic recession and the stalled recovery will no doubt lead several more municipal issuers into financial distress in the coming year. The performance of  municipalities facing severe financial pressure has been significantly impacted by state distress mitigation programs (or lack thereof).  We have two situations now which are almost polar opposites.  In the case of Alabama, the state has hurt Jefferson County by not agreeing to a moral obligation backing of restructured debt and the disallowance of a local tax. In Harrisburg, the state of Pennsylvania wants to help, but the City is rejecting the aid.  In Rhode Island, legislation has been passed to protect GO bondholders by creating a lien on property taxes supporting debt.  In this panel, the speakers will focus on the impact that state mitigation has on local government distress and how trading levels could be impacted by the level of state involvement.