The six-page report, released this week by
"Such a decision would be a positive development for bondholders of local governments that are already in bankruptcy," the Moody's report says, adding that rejection of the CalPERS contract could force
"The Moody's article makes some assumptions that are confusing to those of us who were present in the courtroom at the hearing on
Klein is considering whether to confirm
The city negotiated settlements with all but one of its creditors before its trial began. The Moody's report says if the court decides
Moody's adds, "
Wilson, though, has consistently argued that the city did adjust its pension costs during the bankruptcy process by reducing staffing and employee compensation, and by cutting retiree medical benefits.
"To say we didn't touch pensions is wrong," Wilson said in February.
Wednesday, Wilson added, "The city has focused on reducing the level of all debt, including pension obligations, and the plan of adjustment achieves that goal. Our retirees and employees took substantial and long-term personal hits throughout this process in order to contribute to the fiscal health of the city. The point of contention appears to be that we did it at the bargaining table rather than in the courtroom."
CalPERS has stated that
This week's Moody's report also says a ruling by Klein against CalPERS "could encourage other stressed municipalities" facing steep pension costs to file for bankruptcy. The implication by Moody's is that more cities might take the step given the ability to tackle pension costs during bankruptcy proceedings.
But Moody's predicted bankruptcy filings would remain "rare events" because of the major hurdles municipalities must surmount to be eligible to file for Chapter 9.
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