Regional News

Jefferson County Bankruptcy Exit Plan Implemented

BRADENTON, Fla. Jefferson County, Ala. has exited municipal bankruptcy, but the county's financial and legal woes are not over.

The county's plan of adjustment went into effect at 1:20 p.m. eastern time Tuesday, according to an announcement on Twitter by County Commission President David Carrington.

The county closed on $1.8 billion of new sewer warrants earlier in the day, the sale of which is a cornerstone of the county's debt adjustment plan. The county used warrant proceeds to pay creditors holding $3.14 billion in sewer debt.

However, attorneys for three customers on the county's sewer system filed a notice Tuesday afternoon with the U.S. District Court in Birmingham that they plan to file a direct appeal of U.S. Bankruptcy Judge Thomas Bennett's Nov. 22 plan confirmation order.

The appeal notice was filed after an emergency hearing Tuesday when Bennett said that his confirmation order constituted a final order enabling the group known as the Wilson ratepayers to file a direct appeal, according to attorney Joshua Firth with Birmingham-based Hollis, Wright, Clay & Vail PC.

Documents necessary for the appeal to proceed must be filed by Dec. 16, Firth said.

Another group of objectors, known as the Bennett ratepayers, filed notice Sunday with the bankruptcy court stating that they also intend to appeal rejection of their payment claim and the confirmation order. Their claim for $1.63 billion is based on what they argue were illegal swap warrants sold by the county in 2002 and 2003.

The Bennett ratepayer's attorney, Calvin Grigsby, objected to a statement made by Carrington to The Bond Buyer.

Carrington said that Grigsby offered to drop his group's appeal of the county's confirmation plan if he was paid $250,000 for legal fees.

Grigsby said in an email that the offer to drop the appeal was made after consulting with clients, and also would have required the county to use $100 million of recently sold warrant proceeds to create an indigent sewer fee relief fund.

The plan of adjustment, which calls for yearly sewer system rate increases, does not include a fund to help indigent sewer system customers pay their bills. However, county commissioners have discussed creating such a fund.

Commissioners also held a press conference Tuesday afternoon reportedly to discuss the county's future.

They said that their focus will now turn to efforts that will expand Jefferson County's economy, according to published reports.

On Thursday, a hearing will be held to consider a request to lift the automatic stay that prevents suits against the county from going forward.

Bernice Averhart and Geraldine Reddick are asking the county to allow their wrongful death suit filed in state court in 2011 to proceed. The suit is against the county's former nursing home, and involves a patient who died.

The petitioners said Alabama law prohibits them from finding out about the liability coverage limits for medical providers but they discovered the information in Jefferson County's Aug. 8 bankruptcy disclosure statement. Now that they know the coverage limits, they want to proceed with their case in state court.

Jefferson County filed for Chapter 9 bankruptcy in November 2011. The case took two years and $25 million to adjudicate. However, the cost estimate filed with the court does not include legal fees for appeals.




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