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Stockton: From Fiscal Distress to Municipal Bankruptcy

Stockton was referred to as the “fiscally distressed municipality du jour” back in March, when MuniNetGuide.com featured an interview with Tim Maniccia, entitled, The Fork in the Road: How a Local Government’s Approach to Fiscal Distress Can Determine its Financial Future.   

Fast forward three months:  Stockton has risen to the dubious ranks of other financially strapped municipalities that have declared municipal bankruptcy.  On June 26, 2012, Stockton City Council voted to file for Chapter 9 bankruptcy protection.  The filing is expected to take place by the close of business on Friday, June 29.

Stockton is the largest U.S. city to declare Chapter 9 bankruptcy protection, although Jefferson County, Alabama (which filed for Chapter 9 in November 2011) remains the largest municipal bankruptcy in U.S. history. 

As such, news stories about Stockton’s bankruptcy announcement abound.  Following is a list of resources that we believe tell the story best:

Straight from the source: 

• Stockton, California’s official website
• A June 26, 2012 City news release announces that Stockton has adopted a pendency plan, a budget and plan for handling day-to-day operations while in bankruptcy. This plan clearly identifies which expenditures will be reduced or suspended. The news release clearly explains the bankruptcy process, its contributing factors, and possible implications. 
• City of Stockton Financial Reports, including Comprehensive Annual Financial Reports dating back to 2001 

Local news coverage:

• A special section on RecordNet.com, the online version of The Record, Stockton’s regional news source, is devoted specifically to the Stockton bankruptcy filing and the events leading up to it. Excellent, comprehensive coverage, all in one convenient section. 
• Sacramento Bee - Stockton City Council Backs Bankruptcy Protection 

Articles from national media outlets:

• (6/27/12) The Bond Buyer - Stockton Drama Heads to Bankruptcy Court
• (6/27/12) The Atlantic Cities - A Bankrupt City, by the Numbers 
• (6/27/12) Bloomberg - Stockton, California To File for Bankruptcy Protection
• (6/27/12) Reuters - Stockton, California to File for Bankruptcy 

This list will likely grow in the coming days ... stay tuned!

Municipal Bankruptcy Resources:

• U.S. Courts - Bankruptcy Basics: Chapter 9 Municipal Bankruptcy Protection 

• MuniNet Guide Expert Interview with James Spiotto, Chapman & Cutler: Municipal Bankruptcy Remains Last Resort Despite Troubled Economy