County Hopes To Be Out Of Bankruptcy By Summer
SANTA ANA, Calif. (AP) _ Orange County’s chief executive outlined a timetable Wednesday to free the county from bankruptcy by June 30 and bring the biggest municipal bankruptcy case in U.S. history to a close.
The affluent, mostly suburban county filed for bankruptcy protection in December after losing $1.7 billion through risky investments. It has since laid off workers and cut government services, reducing general spending by more than 40 percent.
``We’ll never be back to where we were,″ said chief executive Jan Mittermeier.
But that may not be a bad thing, she said, since the county will have to look into restructuring its operations to live within its means once the bankruptcy case is resolved. Among its upcoming obligations, Orange County needs to repay $800 million in bond debt in June.
In a related development, 11 creditor agencies, most from outside the county, sued the municipality Wednesday for $44 million plus damages.
The complaint accuses county supervisors of failing to oversee the investment pool in which the $1.7 billion was lost and alleges improprieties in former Treasurer Robert Citron’s management of the funds. Citron later resigned and pleaded guilty to fraud charges.
Plaintiffs in Wednesday’s lawsuit include the cities of Buena Park, Atascadero, Claremont, Milpitas, Montebello, Santa Barbara and associated agencies.
``It certainly will have no material effect on the restructuring,″ said John Amsden, county bankruptcy attorney. He said that even if successful, the plaintiffs will simply join other creditors waiting for repayment under the plan.
Mittermeier said the county hopes to have U.S. Bankruptcy Court approval of its final plan to repay its debts by May 1 and after that hopes to raise about $550 million through financial markets.
Gov. Pete Wilson on Monday signed legislation allowing the county to divert about $50 million a year for up to 20 years from the local transit authority, parks and flood-control districts.
The next step, Mittermeier said, is getting formal approval of the plan from more than 200 agencies that lost money in the investment pool.
They include school districts, water and sewer districts and cities and most have informally agreed to defer repayment pending lawsuits by the county against some firms that had served as advisers to the county. Their approval is expected by Oct. 30.
Orange County plans to file its final recovery plan with the court by Jan. 1, and hopes to have the court’s endorsement by May 1. The county would complete public financing and emerge from bankruptcy by June 30.
Officials have said the county could make its way out of bankruptcy by next summer if all goes well, but the details disclosed Wednesday are the most comprehensive so far.