San Bernardino

Downtown San Bernardino. (File Photo)

By Ryan Hagen, The Sun
Posted: 09/20/14, 8:57 PM PDT | Updated: 58 secs ago

Hearings have begun on Detroit’s plan to exit bankruptcy, slightly more than a year after the distressed Motor City filed for bankruptcy — and at least six months before San Bernardino, which filed for bankruptcy a year before Detroit, expects to even come up with a plan.

Detroit, the country’s largest bankruptcy, is also its fastest, and now the judge handling that case has agreed to delay the case to allow the city and a forceful critic, Syncora Guarantee, to finish a settlement.

Still, other California cases also filed so-called plans of adjustment more quickly than San Bernardino. And to some of the creditors who accuse the city of lingering in bankruptcy court to protect it from tough decisions at the expense of employee groups, it’s one more milestone missed.

“The difference is, one case is alive and one case is dead,” firefighters’ union attorney Corey Glave said.

Glave contends in court filings that the city “has stalled this case too long.”

“During the past two years, the City has taken advantage, sometimes unlawfully, of a wide variety of perceived benefits derived from the bankruptcy filing,” an Aug. 13 filing claims. “During this time, the City has been free of most of the cumbersome responsibilities required of a reorganizing bankrupt entity surrendering to the jurisdiction of a bankruptcy filing. Even so, the City has made little progress toward the filing of a plan of adjustment. In fact, it appears that the City is comfortable with all the delays occurring in this case.”

The union’s contentions about the legality of the city imposing benefit cuts and making other changes haven’t yet been tested in court.

A Thursday hearing in bankruptcy court will shine some light on the path those claims might take, part of an overall pace that’s best for residents, said City Attorney Gary Saenz.

“What the bankruptcy laws do is provide protection for the city so we can make adjustments to our financial situation and make adjustments to our revenue that we achieve and our costs that we incur, so we can maintain a solvent budget going forward,” Saenz said. “(Bankruptcy protection) allows the city to continue providing services at a level that we otherwise couldn’t provide if we did not have the bankruptcy protection. I know that people are impatient. I think what people want more than anything is not so much to be out of bankruptcy but for the city to become more solvent or more financially able to move forward.”

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