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Mammoth Lakes Chap. 9 Case Dismissed

SAN FRANCISCO — Mammoth Lakes, Calif., one of three municipalities in the state to declare bankruptcy this year, won dismissal of its Chapter 9 case after reaching a settlement over a $43 million judgment.

U.S. Bankruptcy Judge Thomas Holman signed the order ending the case on Nov. 16 following the agreement over the lawsuit the town lost in state court to the developer Mammoth Lakes Land Acquisition LLC.

 “No one in town, except those who may be beneficiaries of the MLLA settlement, is happy about the lawsuit or settlement — no one. It affects everyone,” Assistant Town Manager Marianna Marysheva-Martinez said in a statement last month.

The town council voted unanimously in July to file for bankruptcy protection, citing an inability to pay the judgment. The two sides reached an agreement through court-ordered mediation the following month and in September lawyers for the city asked the judge to dismiss the case.

Mammoth Lakes was able to lower the amount it owed MLLA by 31% to $29.5 million. The town said it may make $2 million payments annually for 23 years or may also borrow to cover the cost.

Town officials said in a press release in September the potential high cost of a lengthy court battle and the possibility it could be found ineligible for bankruptcy protection helped push Mammoth Lakes to settle.

In 2008, the Mono County Superior Court awarded MLLA $30 million plus interest and legal fees, saying the town breached a contract tied to a development near its airport. The state Supreme Court last year declined to hear the city’s final appeal.

Negotiations between the town and the developer since the decision failed and a state court earlier this year granted a writ for immediate payment of the full $43 million.

Mammoth Lakes, with population of 8,200 in the Sierra Nevada mountain range six hours from Los Angeles, has an annual budget of around $19 million. It is best known as the base for the Mammoth Mountain ski resort.

The town was one of three municipalities in the state to file for bankruptcy since June. Stockton and San Bernardino both have petitioned for bankruptcy protection.

The only other recent municipalities in California to file are Vallejo in 2008, Desert Hot Springs in 2001 and Orange County, the state’s largest bankruptcy case ever, in 1994.

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