Court Judge Approves Vallejo’s Bankruptcy Exit Plan

by San Antonio Attorney

The City of Vallejo has officially emerged from its three-year bankruptcy after a federal judge confirmed its Chapter 9 bankruptcy exit.

U.S. Bankruptcy Judge Michael McManus posted a judgment on Friday that provides a short period of time for parties with some unfulfilled obligations to make an objection for the city’s exit plan.

In an email written on Friday by the city’s bankruptcy counsel Marc Levinson, he said Vallejo has gone out of bankruptcy, though there are still minor issues that have to be dealt with.

The judgment did not came as a surprise to those concerned after McManus said last week that he did not see any obstacle to the city’s exit from bankruptcy protection.

Councilwoman Marti Brown controlled her excitement on Friday with a bit of wary optimism.

Councilwoman Joanne Schivley, a mayoral candidate in this year’s election, said that they now have to move forward and do what has to be done

For Councilman Michael Wilson, the judge’s decision is only one part of reestablishing the city. The other will be to regain stability on Vallejo’s income by acting at the polls.

The city filed for Chapter 9 after three straight years of budget deficits that used up its cash reserves. Its bankruptcy was the second biggest bankruptcy filing by a municipal in the state of California. Vallejo has put in over $10 million on lawyer and advisor fees since it filed for bankruptcy protection in 2008.

Vallejo’s spending budget had been weighed down particularly by its contracts with fire and police unions. The benefits and salaries of unions used around 80 percent of its funds, which is approximately $65 million. Before the city filed for bankruptcy, its spending budget was $78 million.


–      A successful bankruptcy case usually results in the restructuring as well as rehabilitation of the finances of an individual who is in distress. A San Antonio bankruptcy attorney with diverse experience in the bankruptcy process can take the pressure off you and set you on the path to a fresh start.

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