Revenge of the Retirees

A federal judge has scheduled a hearing for Dec. 8 to consider a motion for relief sought by 50 retirees who are suing the city of Prichard, which filed for municipal bankruptcy in October.

The retirees are asking Judge ­William Shulman to allow their lawsuit filed in circuit court to go forward. The suit was stayed when Prichard filed for ­bankruptcy.

The retiree lawsuit was filed Aug. 13 — before the city filed for bankruptcy — and alleged that city officials were negligent and failed to ensure the financial viability of the Prichard pension fund. The suit also claimed Prichard violated a previous court order requiring it to provide for incremental payments of $16.5 million to the pension. The suit seeks a jury trial, payment of the $16.5 million, and compensatory damages.

Burdened by millions of dollars in unfunded pension obligations, Prichard filed notice in late October of its intention to enter bankruptcy — for a second time. Since the city first filed for bankruptcy in 1999, “Prichard’s economic fortunes have continued to decline and it finds itself unable to adequately address all of its outstanding financial obligations,” the city said in court documents.

The city’s complaint does not state the amount of the unfunded obligation, but it reported that its net revenues in fiscal 2009 were $10.1 million while its net operating expenses were $10.7 million. The city reported to the bankruptcy court that it had no outstanding long-term debt.

A city official told local newspapers in August that $43,872 remained in the pension account and that Prichard was suffering from pension requirements imposed by the state and amended numerous times.

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Bankruptcy Alabama
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