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Abstract: 

Municipalities in the United States currently face extraordinary financial stress. The recent financial crisis and recession have created revenue and tax base issues, but demand for government services and expenses related to government operations necessary to provide services have remained constant or have increased. Although challenges are many, municipalities are not without options. During times of economic contraction, municipalities can seek to restructure their operations and debt obligations through a number of potential avenues, including (1) negotiated and consensual defeasement and refinancing of debt, (2) negotiated and consensual out-of-court restructuring, (3) state administrations, or (4) the filing of a case under Chapter 9 of the Bankruptcy Code. Determining which option or combination of options should be pursued depends on the specific circumstances facing the municipality.

Keywords: municipal restructuring options; credit structures; bond insurance; rights of creditors; state administration

Affiliations:  1: Public Finance, Restructuring and Reorganization, Employment Controversies, and Labor and Complex Commercial Litigation Practice Groups; 2: Vinson & Elkins LLP; 3: Vinson & Elkins LLP; 4: Vinson & Elkins LLP.