A federal bankruptcy judge on Monday reaffirmed a recent ruling that the city of Prichard does not qualify under Alabama law to file for Chapter 9 municipal bankruptcy. The judge said state law requires a local government to have outstanding debt to file for bankruptcy.
Prichard filed for bankruptcy last year, claiming it was burdened with millions of dollars in unfunded pension obligations. At the time the bankruptcy petition was filed, the city said it had no outstanding long-term debt.
Judge William Shulman dismissed the city’s bankruptcy case on Aug. 31.
In a subsequent motion, city attorneys asked the judge to reconsider, arguing that state law does not require outstanding bonds or warrants in order to file for bankruptcy. The attorneys also asked the judge to stay the bankruptcy case to allow them to seek an opinion from the Alabama Supreme Court.
On Monday, Shulman simply denied both of Prichard’s requests.
It is not clear if the city will appeal. In a recent filing, Prichard’s attorneys said the city does have long-term bank financing on the city-owned golf course.