As Jefferson County, Ala., wraps up work to close a deficit on the fiscal 2013 budget, the federal judge overseeing the county’s massive bankruptcy case has rejected requests to set a deadline for preparing a plan of adjustment.

Judge Thomas Bennett said last week that it was too early to require that a plan to be proposed. Assured Guaranty Municipal Corp. had asked Bennett to order the county to submit a plan by Sept. 28 because the county had not set any time frame to propose a plan.

According to published reports, Commission President David Carrington has suggested that the county could file a plan of adjustment by year’s end.

Meanwhile, the County Commission has begun planning to default on its debt to prepare the upcoming budget that would go into effect Oct. 1.

In deliberations, the board said it is considering setting aside $15 million in the next spending plan to pay bankruptcy attorneys.

The funding would have been used to pay debt service on general obligation warrants. The county first defaulted on its GO warrants earlier this year, though they are insured.

Alabama’s largest county filed the country’s biggest municipal bankruptcy last November after talks to restructure $3.14 billion of sewer debt collapsed and the state Legislature refused to authorize additional general fund revenues to replace an employment tax that was struck down by Alabama courts.

The occupational tax provided a significant source of funding. The county is also attempting to reject lease-revenue warrants that were used to build a courthouse and jail.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.