March 13 (Bloomberg) — San Bernardino, the bankrupt Southern California city, said it has made "substantial progress" in recent talks with its biggest creditor, the California Public Employees' Retirement System.
Success in mediation with Calpers, the biggest U.S. public pension, "lays the foundation for negotiations between the city and other parties," San Bernardino officials said in a court filing yesterday, without giving details.
The statement was authorized by the federal mediator handling the city's talks with creditors and was included in a status report given to U.S. Bankruptcy Judge Meredith M. Jury, who is overseeing the case in Riverside, California. A hearing in the case is set for today.
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Since filing for bankruptcy in August 2012, the city has been mired in court fights against creditors including Calpers and the unions, while the creditors vie with each other. One creditor's law firm was kicked out of the case because it hired an attorney away from another creditor's firm.
Last year, when Jury appointed U.S. Bankruptcy Judge Gregg Zive as mediator, the city and Calpers couldn't even agree on which disputes to address. San Bernardino said in court papers it owes Calpers about $143 million in unfunded pension costs. The next-biggest debt is owed to investors who hold about $46 million in pension obligation bonds.
Firefighters' Union
At today's hearing, the firefighters' union is to ask Jury to schedule a hearing over the city's plan to cancel its labor contract. Jury had put off addressing that proposal so the two sides could try to work out their differences in mediation.
In a status report filed March 11 with the bankruptcy court in Riverside, the firefighters said had they made no progress in seven mediation sessions. The union said there may be "potential collateral benefits" from other developments in the mediation.
San Bernardino, a city of about 209,000 people some 60 miles (97 kilometers) east of Los Angeles, was the third California city to file for bankruptcy in a three-month span in 2012. The city cited a fiscal emergency brought on by a $46 million budget shortfall caused in part by the real estate crisis.
The case is In re San Bernardino, 12-bk-28006, U.S. Bankruptcy Court, Central District of California (Riverside).
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