Aug. 22 (Bloomberg) -- Mammoth Lakes, the California mountain resort town, said it settled the $43 million legal fight that forced the city into bankruptcy last month.
The town is among three in California that have filed for bankruptcy since June. Mammoth Lakes’ case differed from Stockton’s and San Bernardino’s because it blamed a single event, a court judgment ordering the town to pay $43 million to a land company.
Details of the settlement will remain secret until final documents are signed, the city said in a statement.
A breakthrough on talks between the city and the company came “as a result of a U.S. bankruptcy court-established mediation,” according to the statement.
The settlement is between the city and its biggest creditor, Mammoth Lakes Land Acquisition, which won a $30 million judgment that grew to $43 million with interest and legal fees.
Mammoth Lakes, a ski resort community of 8,200 near Yosemite National Park, has an annual budget of $19 million. It filed for bankruptcy saying it could not afford to pay the developer.
The company sued the town in 2006 and accused it of breaching a development agreement allowing the company to build homes, retail space, hangars and other structural improvements near the Mammoth Yosemite Airport. Terrence Ballas, who holds the development rights at issue in the lawsuit, is part of the settlement, the city said.
The case is In re Town of Mammoth Lakes, 12-32463, U.S. Bankruptcy Court, Eastern District of California (Sacramento).
-- With assistance from James Nash in Los Angeles. Editors: Charles Carter, Stephen Farr
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