Andrew Edwards, Staff Writer
Posted: 07/20/2012 07:58:22 PM PDT
SAN BERNARDINO – The city’s slide toward bankruptcy is creating new worries for business owners who are wondering when – or if – they will be paid for work performed for either the city or its defunct redevelopment agency.
The City Council voted Wednesday evening to declare a state of fiscal emergency and to seek Chapter 9 bankruptcy protection.
City Hall has pledged to negotiate in good faith with its creditors, but Wednesday’s vote may allow the city to file its bankruptcy case without completing the otherwise required 60-day mediation period.
It’s unknown when or how much of the city’s outstanding bills will be paid, and about one month remains before San Bernardino officials are expected to actually file the bankruptcy case.
Bankruptcy law may give San Bernardino officials relative latitude to favor local companies while drafting a plan to pay off a portion of what the city owes.
Still, the question as to what degree the city’s financial problems may hurt local firms that signed contracts with City Hall is one of the many uncertainties looming over San Bernardino’s pending bankruptcy case.
“The local businesses and local vendors not getting compensated for their work they’ve done could have a real trickle-down effect,” said Larry Quiel, owner of Quiel Bros. Signs.
The sign company has invoices for roughly $19,000 for work performed for the city and the former San Bernardino Economic Development Agency, Quiel said.
Quiel, a board member of the San Bernardino Area Chamber of Commerce, said many other vendors are concerned about repayment.
Acting Assistant City Manager Gwendolyn Waters said the city is still paying its bills.
The Chapter 9 bankruptcy process is intended to help financially broken municipalities continue to provide basic public services. San Bernardino is only the fourth California city to seek protection under its provisions.
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