Photo: freethehops via Flikr
As Jefferson County, Ala., teeters on the brink of bankruptcy, the court-appointed receiver for the county’s sewer system has asked for control over the sewer system’s $257 million in cash and investments, the Birmingham News reports.The move would expand the receiver’s control over the sewer system’s finances in case the county files for Chapter 9 bankruptcy protection. The receiver, John Young, is pushing for double-digit sewer rate increases to pay the $3.2 billion the county owes to the system’s creditors.
The county – home to Birmingham – has struggled since 2008 to reach a settlement to repay its creditors, including JPMorgan Chase & Co. The sewer debt – the result of years of mismanagement and corruption – has been a primary driver of the county’s financial woes.
Last month, the Alabama Supreme Court struck down the county’s occupational tax and business licence fee, cutting off a key source of revenue. County officials say that decision – combined with Standard & Poor’s downgrade of the county’s debt to negative last week – has left them with few good options apart from bankruptcy.
If Jefferson County files for Chapter 9 protection, it would be the largest municipal bankruptcy in U.S. history and could serve a blueprint for hundreds of U.S. municipalities facing insolvency.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.