Jim Penman

By Ryan Hagen, Staff Writer
Posted: 12/17/2012 07:36:35 PM PST

Special Section: San Bernardino

SAN BERNARDINO — The city is prepared for a major hearing in bankruptcy court Friday and strongly rejects claims by its top creditor that its bankruptcy is a “sham,” City Attorney James F. Penman said at Monday’s City Council meeting.

“We think we have a very strong case,” Penman said, referring to the city’s fight to convince bankruptcy Judge Meredith Jury that it is eligible for Chapter 9 bankruptcy protection.

Jury may decide Friday whether San Bernardino qualifies to be in bankruptcy court, and thus to block those owed money by the city from seizing city assets to make up for that debt. Without bankruptcy protection, city officials have said, the city wouldn’t be able to afford basic services like police and fire protection and would be forced to dissolve.

But CalPERS – the largest U.S. pension fund and San Bernardino’s biggest creditor – argues in legal briefs filed Friday that the city filed for bankruptcy only to buy itself time and that its new budget plan doesn’t qualify as a plan because it depends on deferring payments owed to CalPERS and other creditors.

Penman struck back at that claim Monday.

“That’s totally outlandish and incorrect,” he said. “If this city were not bankrupt, there’s not a person in this room who would want to be in a bankruptcy court. It’s not a pleasant place to be.”

Requirements to continue in bankruptcy court include being unable to pay debts as they come due and “desire to effect a plan to adjust its debts.”

The city officials who attended the city’s last bankruptcy hearing in November – Acting City Manager Andrea Travis-Miller, Mayor Pat Morris, Councilwomen Virgina Marquez and Wendy McCammack, and Penman – plan to attend the hearing, Penman said.

It is scheduled for 10 a.m. at U.S. Bankruptcy Court in Riverside.

Read more: http://www.sbsun.com/ci_22212037/penman-strikes-back-against-claims-san-bernardino-bankruptcy#ixzz2FRJ0nRkx