Ryan Hagen, Staff Writer
Posted: 12/03/2012 07:17:05 PM PST

Related story: San Bernardino City Attorney James Penman defends ‘load your guns’ advice

SAN BERNARDINO – The city’s second-largest group of creditors have added their guns to the city’s bankruptcy battle as an ally for now, pitting them against CalPERS and the San Bernardino Public Employee Association.Pension obligation bond holders – investors who collectively own more than $100 million in bonds the city issued in 2005 to re-fund its obligations to the California Public Employee Retirement System – filed the document with U.S. Bankruptcy Court in Riverside on Friday.It rebuts most of the points CalPERS and SBPEA made in their objections to the city’s bankruptcy filing, saying the city’s Chapter 9 bankruptcy petition should be allowed to move forward quickly.

This is good news, said the city’s bankruptcy attorney, Paul Glassman of Stradling Yocca Carlson & Rauth.

“We’re always happy when a major (creditor) decides to file in our support,” said Glassman, whose firm filed an argument making many of the same points in court earlier Friday.

Bondholders were initially skeptical of the city’s case, going so far as to object to an earlier motion by the city, write attorneys representing the banking firms Ambac Assurance Co., Erste Europ ische Pfandbrief-und Kommunalkreditbank AG and Wells Fargo Bank.

But facts provided by the city convinced them, they say.

The 21-page document calls CalPERS’ argument that no decision about eligibility should be made until the city passes a pendency plan – which it now has – and a plan of adjustment “contrary to the purpose of Chapter 9,” which is to give cities breathing room to adjust their debts.

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