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Calpers denied special protection in Stockton bankruptcy

A judge says the pension funds claims against a city in bankruptcy are unsecured and arent superior to debts including unsecured bonds.

By Steven Church | Updated on October 01, 2014

Oct. 1 (Bloomberg) — The California Public Employees’ Retirement System doesn’t deserve special protection as a creditor in a municipal bankruptcy, according to the judge overseeing the debt restructuring of Stockton, a case that pits public pension advocates against Wall Street creditors.

The city’s debt-cutting plan would protect Calpers, the $296 billion pension fund, from any cuts while imposing steep reductions on money manager Franklin Resources Inc. Under the proposal, Calpers would be fully repaid while two Franklin funds would get back only about 1 percent of the $36 million they are owed.

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