A federal judge said Tuesday that she would approve San Bernardino’s bankruptcy plan, meaning that the city can begin the process of emerging from four years of bankruptcy. (Francine Orr / Los Angeles Times)

Paloma Esquivel
December 6, 2016

After four long, painful years, San Bernardino will soon emerge from bankruptcy.

A federal judge on Tuesday said she would approve the city’s plan to exit bankruptcy, marking a major step toward the end of the process for San Bernardino.

“This is a very important day for the city,” U.S. Bankruptcy Judge Meredith Jury said. “The city came in in financial chaos and it’s leaving in a much better place.”

Approval of the city’s plan to pay its creditors and restructure its finances was touted by officials as the start of a new era for the battered Inland Empire city, even as it faces a daunting list of challenges to truly right itself.

“We want our residents to know, and we want people who would invest in the city … to know we’ve cleared this burden and we’re ready to do business,” City Manager Mark Scott said.

The plan includes a list of agreements with employees, retirees, municipal bondholders and many others.

The confirmation order is tentative until being made official, which Jury said would be done within 30 days.

“Nobody is walking away from this proceeding without having taken some kind of hit,” Jury said.

The plan, the broad outlines of which have been known for some time, preserves pension benefits for employees and retirees, though employees will have to contribute more to their pension plans and benefits were modified for new employees.

Retirees will lose some health benefits they were promised.

Meanwhile, some bondholders and unsecured creditors will be paid only 1% of what they were owed.

The vast majority of the city’s creditors have agreed to the plan.

But during Tuesday’s hearing, a number of lawyers for clients with federal civil rights lawsuits against the city that allege police abuse argued forcefully against it.

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