San Bernardino Seal

By Ryan Hagen, The Sun
Posted: 11/18/14, 7:46 PM PST |

RIVERSIDE >> San Bernardino has six months to come up with a detailed plan to exit bankruptcy or its case will be thrown out of court.

U.S. Bankruptcy Judge Meredith Jury ruled Tuesday that the city must file its plan no later than May 30, which is much closer to the March 1 deadline sought by the city’s pension obligation bondholders — and supported by the police and fire unions — than the September date that was part of the city’s agreement with CalPERS.

The city and CalPERS released details of that agreement, reached this summer after months of mediation, for the first time late Monday. The disclosure looked like an attempt to suggest a date closer to September but would have the opposite effect, Jury said.

“I don’t know what took nine months to agree to pay CalPERS in full,” she said, suggesting more would have been accomplished if the city and its creditors had a better idea of what the overall plan would be.

According to both the city and CalPERS, the city will make up all payments missed since the bankruptcy declaration — about $13.5 million — plus interest and fees in 24 equal installments over two years.

That’s the only agreement so far that’s “stuck” from mediation. An agreement between the city and police union fell through, though arrangements have been made to continue that negotiation, police union attorney Ron Oliner said Tuesday.

The bondholders worry that the city’s agreement with CalPERS may not leave room to come up with a workable plan, said Vincent J. Marriott III, who represents Erste Europäische Pfandbrief- und Kommunalkreditbank AG, the Luxemburg-based holder of bonds the city issued in 2005 to pay its pension obligations.

“That deal is really more of a surrender,” Marriott said. “At worst, the city will find there is no feasible plan that could incorporate the deal with CalPERS.”

If that’s the case, people should find out sooner rather than later, he said.

Oliner, who has suggested for months that a deadline is needed, noted that he didn’t agree on everything.

“It should be no surprise to the court that the bondholders don’t want money used to pay employee pensions,” he said. “Notwithstanding that the SBPOA is in agreement with the requested relief, when you hear words like ‘total surrender’ and ‘tails waving dogs,’ we’ll call it hyperbole.”

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