U.S. Bankruptcy Court

United States Bankruptcy Court in Riverside

By Ryan Hagen, San Bernardino Sun
Posted: 10/14/16 – 7:38 PM PDT |

RIVERSIDE >> The city of San Bernardino entered the final stage of its bankruptcy case Friday in U.S. Bankruptcy Court, with a confirmation hearing the city and its thousands of creditors have awaited for more than four years.

The weight of the moment was apparent in the hearing, the first in a series that city officials expect will culminate in the city no longer being bankrupt by about March.

For the first time since shortly after the first bankruptcy hearing, in August 2012, nearly every seat in the courtroom was taken — half the room with San Bernardino’s attorneys, consultants and officials, the other half with attorneys who at various points challenged the city’s plans.

That plan, which includes paying certain creditors only one cent for every dollar they’re owed, was for the most part tentatively confirmed Friday.

“This is a momentous day,” U.S. Bankruptcy Judge Meredith Jury said.

Jury ruled the city had met most of its requirements already and added that she does “not think the city should worry” that she won’t confirm the rest at a later hearing.

Jury reserved judgment on two substantial issues, which are related. One regards a major dispute between the city and the Big Independent Cities Excess Pool, which provides liability coverage for the city, and the other concerns possible lawsuits involving individual employees such as police accused of excessive force.

Those issues will be addressed beginning Nov. 15.

Paul Glassman, the city’s bankruptcy attorney, took a moment at the beginning of the hearing to mark the milestone of the first confirmation hearing.

“The very first hearing in this case back in August of 2012, I told the court that the day that the city entered Chapter 9 (bankruptcy) was a solemn day,” he said. “But since that day the city has come a long way down a difficult path and has made great strides forward, thanks to the efforts of a number of people, many of whom are in the courtroom today.

“I can now say that today is a promise and hope for a better future for the city.”

Jury praised the city for its progress and said she was convinced by the city’s financial models and declarations to show it could not afford to pay more than 1 percent of its debts to unsecured creditors, and she quickly ruled that the plan was feasible — since no one submitted arguments objecting to that.

“Surprisingly, your honor, the aspect of a bankruptcy case that’s most often disputed is not disputed in this case,” Glassman said, regarding the plan’s feasibility.

The 1 percent payout didn’t sit well with attorney Duane Folke, who appeared in court Friday for the first time on behalf of Paul Triplett.

Another court determined that Triplett was entitled to $7.7 million after San Bernardino police in 2006 broke Triplett’s jaw, arm, ribs, leg, ankle and foot, leaving him comatose for three days, according to Folke.

As an unsecured creditor, Triplett would get $77,000 under the city’s plan.

“My client, unfortunately, given the fact that he’s facing blindness, cannot accept the settlement as it stands,” Folke said, showing the judge a poster-size photo of Triplett’s wounds.

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