LOS ANGELES — Detroit's bankruptcy proceedings are on hyper speed compared with San Bernardino's Chapter 9 bankruptcy.
San Bernardino filed bankruptcy in July 2012, was granted bankruptcy eligibility in August, and is currently undergoing confidential mediations with creditors.
Detroit, which filed bankruptcy papers exactly a year after San Bernardino, hopes to exit by October.
A judge's gag order placed in the San Bernardino case since mediation began on Nov. 24 means little information about what an adustment plan would look like has emerged.
The city filed a document on March 13 saying that mediation Judge Gregg Zive had allowed the city to confirm that "significant and substantial progress had been made" in negotiations with the California Public Employees' Retirement System. The document was filed prior to a status hearing before U.S. Bankruptcy Judge Meredith Jury in Riverside bankruptcy court.
The city also said those negotiations would lay the ground work for negotiations between the city and other parties.
CalPERS, the nation's largest employee pension fund, has been the most adversarial of the city's creditors.
San Bernardino is also the first California city to attempt to impair the pension fund in bankruptcy proceedings.
Neither Vallejo, which exited bankruptcy in Aug. 2011, nor Stockton, slated for a May 2014 confirmation hearing on its exit plan, attempted to impair CalPERS.
The city currently owes the pension fund $17 million in overdue payments.
Moody's Investors Service warned in a Feb. 21 report that Stockton and San Bernardino may share Vallejo's fate if they don't modify pension obligations while in bankruptcy.
San Bernardino acknowledged in its status report that if it doesn't enter into modified contracts with all of its city unions it will be unable to propose a feasible plan of adjustment.
"Since the cost of employee compensation in the years immediately prior to the city's bankruptcy filing exceeded the city's available general fund resources, the city needs to be able to reduce those costs," according to the city's filing.
Vallejo continues to face budgetary pressures from its pension obligations, and there has been talk the city could end up back in bankruptcy.
Stockton, which filed for bankruptcy in June 2012, only a month before San Bernardino could exit in two months if an agreement is reached with Franklin Advisors - the only creditor it hasn't reached an agreement with.
The next San Bernardino mediation session is scheduled for April 15 and 16.
The opening brief on CalPERS appeal of the city's eligibility to be in bankruptcy also is due in April. The city would file responding documents in May and an appeals hearing has been scheduled for August.
The Ninth Circuit granted CalPERS leave to appeal on Feb. 26.
