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Abstract: 

Fiscal stress continues to change the landscape of the municipal credit markets. The full impact of recent bankruptcies, work-out plans, and court rulings is ongoing. This paper explores state oversight of local governments, specifics of Chapter 9 filings, and recovery. It considers the recent Detroit, Jefferson County, and Harrisburg sagas and implications for bonds secured by special tax pledges and statutory liens. It discusses possible concessions to bondholders and other creditors in detail as well as other examples and scenarios.

Keywords: Municipal bankruptcy, Chapter 9, state oversight, GO pledge, pensions, secured and unsecured debt

Affiliations:  1: Moody’s Investors Service; 2: Pew Charitable Trusts; 3: State of New Jersey; 4: Mintz Levin.