Number: RL33924
Title: Municipal Reorganization: Chapter 9 of the U.S. Bankruptcy Code
Authors: Robin Jeweler, American Law Division 
Abstract: State and local governments provide services crucial to the everyday life of most Americans. These may include education, police protection, public transportation, water and utilities, to name only a few. When the finances of a municipal entity are threatened, the notion or threat of a "bankruptcy" causes wide spread consternation. In 2005, the destruction wrought by Hurricanes Katrina and Rita on the Gulf Coast led many to speculate on the likelihood of municipal insolvencies and bankruptcy filings. Although states (and the District of Columbia), cannot file for relief under the U.S. Bankruptcy Code, municipalities may be eligible. Chapter 9 of the Code, 11 U.S.C. § 901 et seq., is entitled "Adjustments of Debts of a Municipality." The term "bankruptcy," however, is a misnomer when it comes to chapter 9. For many reasons, this chapter differs from the other chapters of the Code governing liquidation and reorganization of consumers and business.
Pages: 11
Date: March 8, 2007