National Public Finance Guarantee Corp. on Monday asked the judge overseeing Jefferson County, Ala.'s bankruptcy case to order an examination of the county's budget and financial condition.
NPFG, which insures $95 million, or about half, of the county's outstanding general obligation warrants, said it has attempted to contact the county a number of times to obtain financial and operational information. Eventually, the county produced data responsive to only one of 23 items requested, the insurer said in a court filing Monday.
County officials have worked with creditors holding sewer warrants, and made significant progress on resolving outstanding lease revenue warrants, National said, noting that county officials have said they are working on a "consensual" plan of adjustment, which would enable it to exit bankruptcy.
"Unlike the sewer creditors who must look only to the revenues generated by the sewer system for repayment, National and the…GO creditors rely on the general revenues of the county for payment of principal and interest under the outstanding general obligation warrants," the insurer said, adding that it endorses the county's focus on a plan of adjustment but believes it should be grounded in financial realities and within budget constraints.
NPFG said it has obtained only a six-page budget summary for fiscal 2013, which does not allow it to evaluate whether the county can propose a plan of adjustment that the court could confirm. The insurer also questioned whether the county has complied with a state law requiring the budget to be posted on its website.
NPFG said it has paid a total of $7.47 million on GO warrant insurance claims twice this year because the county defaulted on debt service payments. The county has made no provision in its budget to pay on the GOs in 2013. The insurer is asking for an expedited hearing to be held on its motion Dec. 20.
