By Robin Respaut
December 23, 2015
The bankrupt California city of San Bernardino won praise from bondholders on Wednesday for its handling earlier this month of the massacre that killed 14 people, but at the first significant court hearing since the attack, creditors questioned a plan to increase spending to bolster the police force.
U.S. Bankruptcy Court Judge Meredith Jury also praised the city for its handling of the shooting by a married couple.
Creditors were concerned with their treatment in San Bernardino’s proposed plan to exit Chapter 9 protection.
Bondholders questioned the city’s plan to spend $159 million over 20 years to increase police staffing, improve technology and replace aging vehicles, and another $24 million set aside as a bankruptcy reserve.
Representing EEPK, the Luxembourg-based bank and the city’s second-largest creditor, Vince Marriott said the plan was “completely opaque,” and the city needed “to explain in more detail what it is, what it is for, and how it is calculated.”
San Bernardino has proposed to pay a penny on the dollar on nearly $50 million in pension obligation bonds held by EEPK.
The city’s police force has fallen from about 350 sworn officers in 2009 to 290 today. The city has also slashed police pensions and overtime and wants to introduce a salary cap.
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