Creditors of Stockton fight over pension funding while in bankruptcy – New York Times

Creditors of Stockton fight over pension funding while in bankruptcy – New York Times

Creditors of the city of Stockton, Calif., are mounting a challenge against a popular belief: that public workers’ pensions are impervious to cutbacks even when a city goes bankrupt.

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Vacant buildings in Stockton, Calif. The city, which filed for Chapter 9 bankruptcy in June, is many millions of dollars in debt.

They are arguing that Stockton, which has stopped paying interest and principal on its bonds, is not treating its bankruptcy creditors equitably as is required under federal law because it is still funding the pensions of its workers.