LOS ANGELES -- National Public Finance Guarantee has confirmed that the bond insurer has hired a new firm to replace Winston & Strawn, the firm disqualified by U.S. Bankruptcy Judge Meredith Jury in the San Bernardino Chapter 9 bankruptcy case.

Weil, Gotshal & Manges will replace Winston & Strawn in both the Stockton and San Bernardino Chapter 9 bankruptcy cases, said Kevin Brown, a spokesman for the bond insurer.

Jury disqualified Winston & Strawn from the San Bernardino bankruptcy case during a hearing held June 13 in Riverside, Calif.’s U.S. Bankruptcy Court.

The matter cropped up after attorneys for the California Public Employees’ Retirement System filed a motion asking the firm be disqualified, citing a conflict of interest because Winston & Strawn hired lawyers away from their external bankruptcy team at K&L Gates.

Winston & Strawn argued that there was no conflict because the firm had policies keeping the lawyers from disclosing information about CalPERS.

CalPERS also filed a motion requesting that the law firm be removed from the Stockton bankruptcy case.

U.S. Bankruptcy Judge Christopher Klein approved Stockton’s eligibility for bankruptcy in April, allowing the city to draft a plan to adjust its debts. The city is expected to file a plan with Klein in September.

San Bernardino has not been deemed eligible for bankruptcy by Judge Jury, but she has scheduled an interim hearing for July 17 to discuss eligibility with a summary judgment from the judge slated for Aug. 29.

CalPERS is at odds with bond insurers in both San Bernardino and Stockton. The bond firms say CalPERS should be treated like other creditors. CalPERS argues that public pensions are protected under the state constitution and cannot be impaired.

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