City of San Bernardino, California
Opinion
Lead Opinion
Jury, J.
CITY OF SAN BERNARDINO ELIGIBILITY OPINION
A major creditor of the City of San Bernardino, the California Public Employee Retirement System, objected to the eligibility of the City to file a petition under chapter 9 1 of the Bankruptcy Code on the grounds that it did not desire to effect a plan of adjustment and did not file the petition in good faith. The Court recognizes that the City was not a poster child in organization and prepetition planning before it entered into the complex world of chapter 9 reorganization. The Court also acknowledges that the City got off to a slow start in getting its financial records in order and adopting an interim balanced budget to bridge the gap from the petition date to eventual plan of adjustment. However, despite the untidy disarray of the City’s finances and the early lack of direction toward long-term resolution of its admitted financial distress, in this summary judgment proceeding, the Court overrules the CalPERS objections on their limited stated grounds and finds the City eligible to remain in its chapter 9 proceeding. The factual and legal basis for the Court’s decision follows.