LOS ANGELES — San Bernardino has reached a tentative settlement agreement with pension bondholders in its Chapter 9 bankruptcy.
The city reached the agreement with bondholders and the insurer on $50 million in pension obligation bonds on Jan. 5, information that was just released in a filing ahead of the city's Feb. 4 interim status hearing.
In his filing, Paul Glassman, San Bernardino's bankruptcy attorney, said details of the agreement remain confidential.
When the city filed its plan to exit bankruptcy and its disclosure statement on May 29, 2015, after nearly three years in bankruptcy, it drew objections from both Ambac Assurance Corp. and Erste Europäische Pfandbrief-und Kommunalkreditbank AG.
Ambac is the bond insurer on the pension obligation bonds held by EEPK.
Under the terms of last year's exit plan, holders of the $50 million of unsecured POB claims would have received payments of $655,000 plus interest over time, and holders of general unsecured claims between $130 million and $150 million would receive a pro rata share of $1.3 million after the plan became effective.
In a December filing, Ambac Attorney Paul Kreller questioned how the city was able to decide on its "draconian" plan of only paying 1% owed on the pension obligation bonds and general unsecured claims when its financial disclosures are so "murky."
The city, bond insurer and bondholder have been undergoing confidential mediation sessions with Nevada Bankruptcy Judge Gregg W. Zive since May, according to the filing.
The city also reached a settlement agreement with city firefighters that will allow it to move forward with plans to outsource fire services to the county.
The city on Jan. 25 approved a proposal to outsource waste and street cleaning services to Burtec Waste Industries saving $35 million over the life of the 10-year contract, according to the filing. The private company agreed to hire the majority of the 87 city employees now performing that work and set aside $500,000 for employees who transition to Burtec.
U.S. Bankruptcy Judge Meredith Jury gave the city additional time to revise its financial projections.
Amended disclosures documents are now due March 30, rather than Feb. 10, with opposition filings due April 13. The status hearing was postponed from Feb. 10 to April 27 at 1:30 p.m.