Stockton Bankruptcy Judge Appoints Mediator

The judge presiding over Stockton, California’s bankruptcy appointed a fellow judge as mediator for the case and ordered the city and its creditors to meet with her next month.

U.S. Bankruptcy Judge Elizabeth L. Perris will hold a conference on Aug. 30 in Sacramento to decide how to organize the mediation, Judge Christopher Klein said in an order yesterday.

Stockton filed for bankruptcy June 28 after months of mediation failed to yield an agreement between the city and its creditors, including bondholders and labor unions. On the city’s first day in court last week, Klein said that for the bankruptcy to be successful the city will need to propose “a consensual plan of adjustment.”

Perris was named mediator two days after a group of retirees filed a lawsuit in an effort to stop the city from cutting off their health benefits.

Before filing for bankruptcy, the city had announced it would cut retiree benefits to help balance its budget.

The bankruptcy case is In re Stockton, 12-32118, and the retirees’ lawsuit is In re Stockton 12-02302, both in U.S. Bankruptcy Court, Eastern District of California (Sacramento).

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