Stockton, California, won court approval of its plan to exit bankruptcy by paying bond investors pennies on the dollar while fully protecting public-worker pensions, in a case that has been watched by other cities in the state facing heavy retiree costs.
"This plan, I'm persuaded, is the best that could be done in terms of restructuring the city's debts," U.S. Bankruptcy Judge Christopher Klein said at a hearing today in Sacramento, the state capital.
Stockton's bankruptcy pitted public-pension advocates against investors, who stood to recover a fraction of what they're owed for their bonds. Bankruptcy lawyers and pension advocates nationwide followed the case to see whether pensions administered by the California Public Employees' Retirement System (Calpers) would be shielded from cuts.
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