Bankruptcy

BRADENTON, Fla. - Two Birmingham, Ala., residents and a nonprofit group have filed a lawsuit asking that a judge invalidate $2.2 billion of sewer auction-rate securities issued by Jefferson County and $4.2 billion of related swaps, saying the transactions were tainted by corruption.

Pennsylvania's Erie School District last week filed a lawsuit in U.S. federal court against JPMorgan, one of the bank's former brokers, and Investment Management Advisory Group Inc., alleging that collusion by the defendants cost the district more than $1 million on an interest-rate swap transaction.

Vallejo, which filed for Chapter 9 bankruptcy protection in May, filed a list of its 20 largest unsecured retiree health-care benefit claims this week.

WASHINGTON - More than a year after Securities and Exchange Commission chairman Christopher Cox proposed a series of initiatives to boost municipal disclosure and accounting standards, no one in Congress or the municipal market appears to be interested in championing them.

CHICAGO - The imminent departure of Mayor Kwame Kilpatrick may signal the end of the legal and political saga that has consumed Detroit for nearly nine months, but the city's fiscal woes are far from over.

SAN FRANCISCO — A U.S. bankruptcy court has ruled that Vallejo, Calif., is insolvent.

CHICAGO - Investors holding $38 million of bonds issued on behalf of a Michigan hospital will likely end up receiving just $3.2 million under a deal announced last week allowing the cash-strapped facility to enter bankruptcy before being purchased by a for-profit group of physicians.

BRADENTON, Fla. - A proposed restructuring plan reportedly being offered by Alabama Gov. Bob Riley to Jefferson County's sewer system creditors would require bondholders to accept a lower interest rate, banks to buy back some or all of the county's auction-rate securities, and swap counterparties to seek reimbursement for termination payments from bond insurers.

CHICAGO - Detroit Mayor Kwame Kilpatrick was expected to plead guilty to felony charges this morning as part of a deal that likely will result in the once-popular young mayor resigning from office and possibly serving jail time.

WASHINGTON - More than half the municipal bonds sold between 1996 and 2005 have been delinquent in filing financial disclosures, showing the secondary market disclosure system for the municipal market is flawed, mostly because there are "no consequences for not filing," Peter J. Schmitt, president of DPC Data Inc., said yesterday about a new study released by his firm.

CHICAGO - Michigan Gov. Jennifer Granholm was poised to begin a historic removal hearing today on indicted Detroit Mayor Kwame Kilpatrick amid a flurry of last-minute appeals and back-room plea deal negotiations that continued through late yesterday.

A federal judge in Pennsylvania has scheduled a criminal trial to begin Dec. 8 for Robert Bradbury, the former head of the defunct underwriter Dolphin & Bradbury Inc., who has been charged by U.S. attorneys with allegedly defrauding four Pennsylvania school districts by selling them unsuitably risky notes between 1998 and 2004.

SAN FRANCISCO - Oakland has filed suit against several bond insurers, with charges that include fraud and breach of contract, for the sale of bond insurance policies that the city says turned out to be worthless.

SAN FRANCISCO - The judge in Vallejo, Calif.'s bankruptcy case may rule on its eligibility for protection from creditors as soon as today.

BRADENTON, Fla. - Alabama Gov. Bob Riley on Friday afternoon said he struck a deal with investors in Jefferson County's troubled sewer debt and bond insurers to extend debt forbearance agreements until Sept. 30 at no cost to the county.

Former of global head of the UBS Securities LLC municipal securities group David Shulman has officially left the company, after being on administrative leave since July, the company confirmed yesterday.

DALLAS - A prominent El Paso contractor that has built numerous bond-financed schools and public facilities may be forced to liquidate after its top executive was indicted in an alleged bribery scheme.

BRADENTON, Fla. - Jefferson County, Ala., this week moved closer to what would be the largest municipal bankruptcy filing since Orange County, Calif., sought protection from creditors in the 1990s.

CHICAGO - Michigan regulators said they are in early talks with Comerica Securities over investors' losses in the auction-rate securities market, part of the ongoing multi-state probe into broker-dealers' ARS sales practices.

WASHINGTON - The Securities and Exchange Commission's proposed rule changes that would limit the influence of credit rating agencies and boost the role of analysts at investment firms are being strongly criticized by the four firms that have commented on them so far.