Pat Morris

San Bernardino Mayor Pat Morris arrives on Wednesday to the United States Bankruptcy court in Riverside. A tentative ruling by a Federal judge grants San Bernardino bankrupty protection. (Gabriel Luis Acosta/Staff Photographer)

By Ryan Hagen, The Sun
Posted: 08/28/13, 1:28 PM PDT | Updated: 3 hrs ago

RIVERSIDE >> A year of limbo ended Wednesday when San Bernardino was granted bankruptcy protection, moving the city into the next stage of its attempt to reorganize and regain solvency.

The California Public Employees’ Retirement System had objected that the city didn’t qualify, charging among other things that the city was “languishing” in bankruptcy without meeting the Chapter 9 prerequisite of wanting to form a plan to balance its budget longterm.

But bankruptcy Judge Meredith Jury took a dim view of that, saying there was no evidence the city didn’t intend to move forward — and that she didn’t see any alternatives for the city except bankruptcy and dissolving.

“If they (CalPERS) got all the money that they want under what they say is their contract and statutory right, who isn’t going to get paid?” Jury asked, rhetorically. “All the employees. I don’t know. How does that help CalPERS, if the employees don’t get paid?

“The citizens of this city deserve a chance.”

CalPERS attorney Michael Gearin replied that the pension system had a responsibility to keep the system solvent and worried what would happen if San Bernardino and other cities were allowed to move into bankruptcy through a “self-inflicted crisis” without considering alternatives or a plan to balance its books afterward.

“We think that’s a dangerous precedent,” Gearin said. “It’s going to create incentives for debtors to create a crisis to determine that they’re unable to negotiate with creditors because they have a large number of creditors, and then to walk into bankruptcy court without any intention” of making a plan.

The city’s bankruptcy attorney, Paul Glassman of Straddling Yocca Carlson Rauth, responded with words he said were written by City Attorney James F. Penman.

“It’s an emergency room, not a health spa,” he said. “And to suggest that a city would subject itself to the process unless it had to is disingenuous.”

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