The 11th Circuit Court of Appeals has agreed to allow the Securities Industry and Financial Markets Association to file an amicus brief in appeals of various municipal bond rulings in Jefferson County, Ala.'s Chapter 9 bankruptcy case.
The main two issues in SIFMA's brief cover the county's appeal of the bankruptcy judge's decision to protect pledged special revenues securing the county's sewer warrants, and the judge's ruling that stripped the state court-appointed receiver's authority over the county's sewer system, which is under appeal by creditors.
SIFMA said Congress amended the municipal bankruptcy law in 1988 to protect municipalities' access to the revenue bond market at reasonable rates, and to protect the bond market.
"The amendments were designed to ensure that important traditional municipal revenue bond financing principles, such as the use of a revenue pledge to secure the bonds and the use of state receiverships as an enforcement mechanism, would survive an issuer's bankruptcy filing," the association argued.
"A decision that undercuts Congress's purpose in enacting the amendments could have seriously detrimental effects on the revenue bond market and on municipalities' access to revenue bond financing, contrary to Congress's intent," SIFMA's brief said.
The appellate court should affirm the bankruptcy court's ruling that protects a revenue pledge after bankruptcy, and reverse the ruling ousting the receiver, SIFMA's said.
While the appellate court has accepted the appeals, no dates have been scheduled for oral arguments.