The largest insurers of Jefferson County, Ala.’s troubled $3.2 billion sewer debt along with the county’s trustee yesterday filed suit against the county and the County Commission seeking the appointment of a receiver for the sewer system.

Syncora Guarantee Inc., Financial Guaranty Insurance Co., and the trustee, the Bank of New York Mellon, filed suit in the United States District Court for the Northern District of Alabama, saying that the county has refused to comply with its contractual and legal obligations to raise sewer rates and otherwise general sufficient revenues to satisfy its debt obligations.

In a statement, County Commission president Bettye Fine Collins said: “The county will assert its rights and defenses which will include the fact that neither additional sewer rate increases or other sewer revenue enhancements are legally available to the County Commission.”

Standard & Poor’s yesterday lowered its rating three notches on Jefferson County’s series 1997A, 2001A, 2003B-1-A through B-1-E, and 2003 C-1 through C-10 sewer system revenue bonds to C from CCC.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.