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Officials in Jefferson County, Alabama could decide as soon as Thursday whether they will file for the largest municipal bankruptcy in U.S. history.The AP reports that the Jefferson County Commission will hold a special meeting Thursday night in Birmingham to decide whether they will keep trying to work out a deal with the county’s sewer creditors or file for bankruptcy.
The county has still yet to receive a response to a repayment plan for its $3.2 billion sewer debt. The plan, which would erase nearly $1.3 billion of the debt, was submitted to creditors more than a week ago.
The meeting will come one day before the end of a 30-day negotiating period between the county and its creditors.
County officials met with municipal bankruptcy lawyer Kenneth Klee, who represented Orange County in its 1994 bankruptcy, the largest muni bankruptcy to date. One commissioner acknowledged after the meeting that there is an “80 per cent chance” the county will file for bankruptcy.
As the largest county in Alabama, Jefferson County, home to Birmingham, is a key economic driver for the state. A bankruptcy filing would likely have significant spillover effects on the fiscal health of the county’s school districts and municipalities, as well as lead to higher borrowing costs for the state and local governments.
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