SAN FRANCISCO - The U.S. Ninth Circuit Bankruptcy Appellate Panel late Thursday ordered Vallejo, Calif., to show that the $136 million in restricted funds on its balance sheet are legally restricted, as the panel considers a labor union appeal of the city's bankruptcy eligibility.

The city and its unions have been litigating for the past 10 months over whether Vallejo is unable to pay its bills or just unwilling. Federal Bankruptcy Judge Michael McManus ruled in September that the city's general fund was really insolvent and eligible for bankruptcy protection.

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.