Law and legal issues

An investor with a stake in $39 million of defaulted bonds issued for a failed artificial sweetener plant in Missouri dropped the underwriter's counsel from litigation and may be zeroing in on underwriter Morgan Keegan & Co.

The California Public Employees' Retirement System filed motions to remove the law firm Winston & Strawn LLP from the San Bernardino and Stockton Chapter 9 cases because they hired their outside bankruptcy attorneys.

Wells Fargo Bank N.A. has notified investors holding the defaulted bonds of three Georgia charter schools that they will lose about 22.7% of their outstanding principal.

The Harris County-Houston Sports Authority is fending off a legislative effort by the company that insures nearly $1 billion of its stadium bonds to restrict use of revenues to debt service.

Arkansas Treasurer Martha Shoffner faces federal extortion charges for accepting $36,000 in bribes in an alleged pay for play scheme.

More than a year into a battle between the San Diego County Water Authority and the Los Angeles-based Metropolitan Water District of Southern California over rate increases, the central issues appear to be far from resolved.

The settlement breakdown between Burlington, Vt., and Citi over a $33.5 million lawsuit regarding a city-owned telecom is a negative for the city, said Moody's.

Harrisburg, Pa., Mayor Linda Thompson must overcome bad poll numbers in her re-election bid as the capital city's woes provide a Democratic primary backdrop.

Arkansas State Treasurer Martha Shoffner was arrested Friday by the FBI on a charge of public corruption dealing with extortion.

The Stephens Hopkins Center of Providence accuses Moody's of bias in its reporting about the repayment of moral obligation bonds in the 38 Studios controversy.

Detroit's plan to restructure its debt "puts default squarely on the table" and signals bankruptcy is a real option, Moody's Investors Service says in a comment.

The Jefferson County, Ala., Commission is expected to approve another settlement with creditors over $105 million of defaulted 2001B variable-rate general obligation warrants.

The Detroit branch of the National Association for the Advancement of Colored People filed a lawsuit Monday saying Michigan's new emergency management law violates the voting rights of African Americans.

Putting bondholders on notice, Detroit Emergency Manager Kevyn Orr said restructuring the city's debt is essential to the city's survival and outlined four options he is currently considering in a new report released Sunday.

San Bernardino, Calif., and creditors like CalPERS can't agree what numbers to argue over as the city prepares to ask a federal judge to declare it eligible for bankruptcy.

Orange County, Calif. loses its dispute with state Department of Finance over more than $73 million in property taxes in a conflict with roots in the county's bankruptcy.

Pennsylvania lawmakers introduced bills they say would enhance state oversight of municipal financing deals and prevent another Harrisburg-type fiasco.

Morgan Keegan & Co. Inc. denies any wrongdoing and attacks as overtly biased Missouri Secretary of State Jason Kander's petition alleging securities fraud in its role as underwriter of Moberly, Missouri's $39 million of defaulted bonds.

Detroit's Emergency Manager is expected to unveil his highly anticipated report on how to restructure the city's operations and debts on Monday.

Cincinnati attorneys told a federal appeals court Monday that a legal challenge to the $197 million plan to privatize the city's parking system will force the city to lay off hundreds of employees to offset budget shortfalls.