Judge to Decide Kentucky City's Bankruptcy Status in January

BRADENTON, Fla. – A federal judge likely will decide in January if Hillview should be the first municipality in Kentucky to qualify for Chapter 9 bankruptcy.

After hearing arguments Dec. 9 on whether the city is insolvent, U.S. Bankruptcy Judge Alan C. Stout ordered Hillview and Truck America Training LLC, the sole objector of the city's case, to file briefs containing findings of fact and conclusions of law by Jan. 8.

Hillview and Truck America will have an additional seven days to file responses to each other's briefs.

Stout said that he will make a decision about whether Hillview can continue with its case after receiving all filings.

Truck America is objecting to the case as the city's largest creditor after winning a court judgment in 2012 for conveyance of the property and "lost profit" damages in a breach of contract suit over a land dispute. The 40 acres in dispute was eventually conveyed to the company in early 2015 as part of settlement negotiations.

Hillview filed for bankruptcy on Aug. 20 to stop interest from accruing on the damage award, which had grown to $15 million. The city claims it cannot pay the judgment even though Truck America agreed to settle the debt for around $5 million or 33 cents on the dollar.

In court papers, Hillview said that Truck America's "take or leave it" ultimatum that the city pay off the $5 million by issuing general obligation bonds over 25 years was unacceptable.

"The city's concerns over its long term abilities to repay additional GO bonding was, and continues to be, of no concern to Truck America," Hillview attorneys said in a Dec. 7 filing. "It is of immense concern to city officials and decision-makers, who are first charged with acting to protect the health, safety and welfare of the city's residents."

Hillview's second-largest creditors are bondholders.

The city owes $1.39 million on GO bonds that it issued, and $1.78 million in a pool bond issued by the Kentucky Bond Corp.

The city attorney has said there are no plans to restructure the outstanding bond debt.

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Bankruptcy Kentucky
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