JeffCo Courthouse Restructuring Approved

Federal bankruptcy judge Thomas Bennett approved the first debt restructuring in Jefferson County, Ala.'s bankruptcy case last week.

Bennett approved a negotiated settlement between the county and bond insurer Ambac Assurance Corp. that restructures $82.5 million of lease revenue warrants sold in 2006 to build a county courthouse and jail in the city of Bessemer.

The 20-year warrants were sold by the Jefferson County Public Building Authority, and county commissioners were to make annual appropriations to pay the debt service.

After filing for bankruptcy, the county negotiated with Ambac to reduce annual debt payments and extend the final maturity by 11 years to 2037 from 2026.

Because of Ambac's insurance, investors won't see any change in scheduled principal or interest payments.

National Public Finance Guarantee Corp., which insures the county's general obligation warrants, objected to the deal, saying it  committed the county to pay lease warrant holders and Ambac in full potentially at the expense of funds available to pay other debt holders.

Ambac said that the settlement requires it to make "significant financial concessions" to pay $28.2 million for debt service between 2016 and 2026. If the county decides not to renew is annual appropriation, or fails to make payments, Ambac would be exposed to losses of more than $100 million.

Bennett overruled NPFG's objection and said the settlement appeared to be "a fair and equitable consensual resolution" of the various issues.

"This is a significant move," said county manager Tony Petelos. "Judge Bennett's approval of the settlement helps ease the county's cash flow and preserves the Bessemer courthouse location for the long term."

The county reportedly is continuing negotiations with other creditors holding debt.

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Bankruptcy Alabama
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