Stockton bankruptcy likely to be costly mess

http://www.msnbc.msn.com/id/47919864/ns/business-us_business/

A costly mess, including court battles with employees and lenders that could stretch over years, is likely to await Stockton, California, if it cannot reach a last-minute deal with creditors and becomes the largest U.S. city ever to file for bankruptcy.
"A Chapter 9 bankruptcy proceeding is complicated, expensive, time-consuming and uncertain," said James Spiotto, a lawyer and municipal bankruptcy specialist at the Chapman and Cutler law firm in Chicago. "More likely than not, you're not going to get your desired result."
Stockton on Wednesday provided an initial outline of what a "bankruptcy budget" might look like for the city of 292,000 as a June 25 deadline for mediation talks with bond holders, employee unions and others approaches. The city proposes to stop payments on much of its debt and impose wage and benefit cuts including the elimination of all retiree healthcare benefits after a one-year transition period.
Stockton has already slashed its workforce sharply in recent years, cutting the police force by 25 percent, the fire department by 30 percent, and all other departments by more than 40 percent.