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Jefferson County Files for Bankruptcy

Jefferson County, Ala., commissioners Wednesday voted to file the largest municipal bankruptcy in U.S. history, saying they could not come to terms with creditors over restructuring $3.14 billion of defaulted sewer debt.  On a 4 to 1 vote, commissioners decided to proceed with a Chapter 9 filing.  The decision was rendered after commissioners met over two days with attorneys and discussed last ditch settlement terms with creditors.  The county filed the petition for bankruptcy at the federal courthouse in Birmingham, the county seat.

The lone dissenting vote against bankruptcy came from Commissioner George Bowman who previously voted against settling with creditors because restructuring the sewer debt would have required raising sewer rates. He wanted to propose a counteroffer that would have creditors take up to a 50% haircut.