Stockton Creditors Hold Few Weapons in Bankruptcy Fight

Lawyers for Stockton, California’s bondholders, who face a fight with the bankrupt city over proposed cuts, arrived in court today armed with fewer weapons than investors owed money by reorganizing companies.

Stockton is trying to become the first American city to use bankruptcy to successfully impose losses on bondholders. Bondholders will be limited to two main options if they are to block Stockton in court, said Lee Bogdanoff, a bankruptcy attorney: get the case thrown out or defeat the city’s reorganization proposal.