PORTLAND, Ore. — Stockton, Calif., officials said the city reached an agreement on health benefit claims with city retirees in its bankruptcy case.

The city has agreed with the retiree committee appointed in its case to a lump sum payment of $5.1 million to the 1,100 retirees who had a liability for medical benefits in the hundreds of millions of dollars, according to a statement late Wednesday.

The payment will be part of Stockton's plan to reorganize its debts that will need to be approved by U.S. Bankruptcy Judge Christopher Klein in Sacramento before it exits Chapter 9 protection.

All city creditors in the case, including the retirees, will be able to vote on the plan of adjustment.

City officials said the plan will be filed by late summer or early fall.

Stockton, a city of 300,000 in California's Central Valley, became the largest city in the country to enter bankruptcy after a federal judge in April approved the city's eligibility for Chapter 9 protection, nine months after it filed for relief and following a three-day trial over challenges by bond market creditors.

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