Jefferson County, Ala., Bankruptcy Appeal Hearing Delayed

BRADENTON, Fla. — Jefferson County, Ala., exited Chapter 9 in December but the appeal of the bankruptcy ruling will drag into the summer.

The first hearing, which had been set for May 15, has now been rescheduled for July 18 due to a scheduling conflict with a criminal case, according to former broker-dealer Calvin Grigsby, who is an attorney.

Grigsby is representing 13 litigants in the appeal known as the Bennett ratepayers whose lead plaintiff is Jefferson County Tax Assessor Andrew Bennett.

Three appeals have been filed by the group on various aspects of Jefferson County's bankruptcy plan, though each involve some aspect of the county's sewer system, which had $3.1 billion of debt when the county filed for reorganization in November 2011.

The county's exit plan hinged on the sale of $1.8 billion of new sewer refunding warrants to write down the outstanding $3.1 billion in debt.

The sale closed in December, and enabled the county to emerge from Chapter 9 bankruptcy.

The Bennett ratepayers want to unwind that deal, and have claimed in legal arguments that $1.63 billion of the warrants were illegally issued and that the county illegally entered into associated swaps.

County attorneys have argued that the Bennett appeals are moot because their challenges were dismissed when U.S. Bankruptcy Judge Thomas Bennett confirmed the county's plan of adjustment on Nov. 22.

The appeal ultimately will determine if Bennett properly confirmed the county's plan, and other aspects involving associated cases filed by the Bennett ratepayers.

Legal experts have said that the appellants face an uphill battle because courts typically uphold the decisions of bankruptcy judges.

However, it can take months or years for the process to conclude, and appeals can go all the way to the U.S. Supreme Court.

 

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Bankruptcy Alabama
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