San Bernardino Seal

By Ryan Hagen, The Sun
Posted: 02/27/14, 8:12 PM PST |

San Bernardino’s largest creditor has permission from the 9th U.S. Circuit Court of Appeals to appeal a bankruptcy judge’s finding that the city is eligible for bankruptcy protection, raising the potential that the court could reverse the 2012 ruling that city officials then called vital for the city’s protection.

But city officials don’t expect to walk through that door now with the California Public Employees’ Retirement System, much less face an adverse decision.

City Attorney Gary Saenz, describing himself as frustrated but unsurprised by the decision, said he still expects to reach a settlement with CalPERS.

“I think we’re on very solid ground in terms of this appeal. So I’m not really concerned about the appeal per se, but that’s what this bankruptcy is all about, our limited funds to provide services to the taxpayers, and we have to spend time opposing the appeal. So we obviously have a lot of incentive in mediation, but I think CalPERS does, too.”

CalPERS convinced U.S. District Judge Dolly Gee in December to allow a direct appeal of U.S. Bankruptcy Judge Meredith Jury’s decision that the city qualified for Chapter 9 bankruptcy protection, arguing that the key requirements of good faith and a desire to restructure its debts were not met.

Since then, though, creditors and city officials have participated in mediation regularly — as recently as Monday and Tuesday — with U.S. Bankruptcy Judge Gregg Zive.

Those sessions are confidential, but participants continue to report substantial progress. Enough progress, say both Saenz and Mayor Pat Morris, that they expect CalPERS to conclude it’s in CalPERS’ best interest to agree on a settlement rather than facing the uncertainty of a court case.

To read entire story, click here.