LOS ANGELES - The question of whether or not Stockton, Calif. can emerge from bankruptcy will be put off a little while longer.
Another day will be tacked onto the confirmation hearings for the city's Chapter 9 exit plan, which began Monday and was originally scheduled to conclude Thursday.
The final day has been scheduled for June 4.
The trial has lasted longer than expected, with attorneys for Franklin Advisors, Inc., in particular, receiving criticism from U.S. Bankruptcy Judge Christopher Klein for using too much time.
"During some of (the questioning) I thought I was sitting in depositions," Klein said, according the Stockton Record. "To some degree I don't have a lot of sympathy, but also, this is an important case, and I want everyone to have a fair opportunity. I will add a fifth day, but no more than a fifth day."
Franklin Advisors is the only major creditor with which Stockton has not reached an agreement. The investment firm is objecting the city's plan, saying it is unfairly receiving less than one cent on the dollar on a $35 million loan.
Franklin also argues that it is being discriminated against because the city is treating other creditors more favorably.
The San Mateo, Calif.-based firm's objections have brought up the city's treatment of its pension obligations, which remain untouched under the city's proposed exit plan. Franklin says the city's refusal to confront its pension problem provides no justification for Franklin's "meager" proposed recovery.
Such pension treatment has become a focal point of the case, getting officials from the California Public Employees' Retirement System involved.
Even though Stockton is not trying to impair its CalPERS payments, Klein has indicated that he is prepared to rule on whether or not pensions can be impaired. He has in the past rejected a contract impairment argument, noting that the constitutional prohibition against contract impairment does not apply in the bankruptcy arena.
Stockton, a city of 298,000 about 80 miles east of San Francisco, filed for bankruptcy in June 2012 and received eligibility in approval in April 2013.
