SAN FRANCISCO — Vallejo, Calif., will likely exit Chapter 9 bankruptcy by the end of July as it nears deals with two of its unions, according to attorneys.

The struggling Northern California city will likely get its plan to restructure its debt approved by a federal bankruptcy judge if all sides are on board for a final confirmation hearing tentatively set for July 28.

If the plan confirmation “is not contested, it is easy and possibly over by noon; if it is contested, it can go on for some time,” said Vallejo’s bankruptcy lawyer, Marc Levinson from Orrick Herrington & Sutcliffe. “It really comes down to whether we can reach an agreement with the two unions, and we are making progress.”

The city has been trying to hammer out an agreement with two of its four unions, the International Association of Fire Fighters and the International Brotherhood of Electrical Workers.

The lawyer representing the two unions, Kelly Woodruff of Farella Braun & Martel, said she thinks the two sides will likely be able to come to an agreement by May 20, the due date for a revised exit plan.

Levinson has said the city and the two unions are trying to work mainly through specific issues, such as taxes and ­pensions.

However, both Levinson and Woodruff acknowledged without elaborating that there is one sticking point that has been hard to overcome.

Many of the general unsecured claims — those without collateral — stem from the city’s rejection of collective bargaining agreements with the IAFF and IBEW unions during the city’s move to bankruptcy, according to court filings.

The city has received 969 general unsecured claims totaling $262 million, court documents indicate.

As it stands in the preliminary plan, retirees, union members and general liability claims would be paid 5% to 20% of their claims out of a $6 million pool.

The bankruptcy exit plan is based on a five-year road map approved by the Vallejo City Council that tackles $195 million in unfunded pension obligations, cuts payments for retiree health care, reduces pension benefits for new employees, raises pension contributions from current workers, and creates a rainy-day fund.

Vallejo, with a population of around 120,000, filed for bankruptcy in May 2008 due to dwindling tax collections and what the city called unsustainable labor contracts.

It represents the largest municipal bankruptcy in California, and one of the biggest in the country, since Orange County’s in 1994.

The San Francisco Bay Area city has reached tentative agreements with bondholder Union Bank, the owner of $45 million of debt, and National Public Finance Guarantee Corp., the insurer of some of the bonds.

The next hearing in the case is set for May 26 in Sacramento for approval of a revised preliminary plan and disclosure statement.

After U.S. Bankruptcy Court Judge Michael McManus approves the updated documents, creditors will vote on the plan.

Once a vote is complete, McManus will hold the confirmation hearing to determine the merits of the plan before giving his final approval.

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