SAN FRANCISCO - Stockton, Calif. has formally filed for bankruptcy.
The Chapter 9 filing, announced late Thursday by the city, makes Stockton the third largest issuer of debt to file for Chapter 9 bankruptcy protection, after Jefferson County, Ala. and Orange County, Calif.
The city filed for protection in the U.S. Bankruptcy Court’s Eastern District of California in Sacramento.
Stockton has more than $300 million of bonds outstanding tied to its general fund, and more than $700 million in bond debt overall.
The filing this week was expected after City Council Tuesday voted 6-1 to adopt a budget for fiscal 2013 that assumed the Chapter 9 filing.
“Our General Fund resources are depleted, and we cannot allow the City to spiral into uncontrolled default,” City Manager Bob Deis said in a statement. “Bankruptcy stops a barrage of lawsuits and allows the City breathing room while working toward a Plan of Adjustment and moving Stockton forward.”
