Jefferson County Finally Gets Bankruptcy Appeal Hearing Date

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BRADENTON, Fla. – The 11th Circuit Court of Appeals scheduled oral arguments in the appeal of Jefferson County, Ala.'s bankruptcy plan, after being urged to do so by the county's attorney.

The panel will hear arguments at 9 a.m. Dec. 16 in Atlanta, according to the court calendar.

The date is not listed as tentative, unlike previous calendar postings.

"I am delighted that our case is now set and that we will have our day in court," said Jefferson County Commission President Jimmie Stephens, adding that he anticipates the date will remain firm.

Arguments in the county's case have been tentatively set seven times in the past year only to be removed from the calendar, county attorney Kenneth Klee with Klee, Tuchin, Bogdanoff & Stern LLP, said in a Nov. 4 letter requesting that the court a set a firm date for the appeal.

Court officials responded Monday, posting the Dec. 16 hearing date.

There is no set schedule after that for the judicial panel to issue a ruling.

Jefferson County has now been in appeal mode nearly three years defending its bankruptcy plan, a year longer than it took to go through the Chapter 9 process.

In December 2013, two years after filing to adjust debt primarily related to sewer system obligations, Jefferson County exited bankruptcy after selling $1.8 billion in sewer refunding warrants to write down $1.4 billion of the sewer system's debt.

A bondholder security provision in the county's plan allows investors to go back to the bankruptcy court should county commissioners fail to comply with their promise to enact sewer system rates that will support the 40-year warrants.

A group of ratepayers on the sewer system, who are local elected officials and residents, challenged the constitutionality of the provision, filing an appeal of the plan of adjustment January 2014 in the U.S. District Court in the Northern District of Alabama.

County attorneys have argued that bankruptcy court oversight is a prime security feature that lured investors to purchase the 2013 warrants, and that the ratepayers' appeal became moot when the plan of adjustment was implemented with the sale of new debt.

Judge Sharon Blackburn disagreed with the mootness contention in an October 2014 ruling, and ruled that she could consider if portions of the plan are constitutional, including the element allowing the bankruptcy court to retain oversight of it.

Jefferson County appealed Blackburn's ruling, which is the case pending before the 11th Circuit Court.

"I am very confident that the facts and prevailing law support Jefferson County's position," Stephens said.

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Bankruptcy Alabama
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