Jefferson County, Alabama (STOAL1:US), will settle a bankruptcy claim held by school-system bondholder Depfa Bank Plc, that will save the county about $1 million a year, a county commissioner said.
The county and the bank will sign the agreement to reduce the interest rate on about $162 million, County Commissioner Jimmie Stephens, who heads the commission’s finance committee, said yesterday in a phone interview. Commissioners approved the arrangement today without discussion.
The settlement is one of three signed with creditors so far in the case, Stephens said. It won’t affect the continuing battle between the county and sewer warrant holders owed more than $3 billion.
“All of these deal with general fund or special revenue debt and none with our sewer debt,” Stephens said. “We need our sewer creditors to be begin some realistic negotiations to move forward.”
The deal on the school warrants “shows our willingness to get things done, to everyone’s benefit, the county’s and the creditors,” Stephens said.
Of the $814 million in unpaid school warrants, the debt held by Depfa had the highest interest rate, County Manager Tony Petelos said.
Jefferson County filed the biggest U.S. municipal bankruptcy in 2011 after a deal with sewer warrant holders fell apart. Since then, the county and the sewer warrant holders have been fighting in bankruptcy court.
The case is In re Jefferson County, 11-05736, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham).
To contact the reporters on this story: Steven Church in Wilmington, Delaware, at firstname.lastname@example.org; Margaret Newkirk in Atlanta at email@example.com
To contact the editors responsible for this story: John Pickering at firstname.lastname@example.org; Stephen Merelman at email@example.com