Wednesday, April 17, 2013

Philadelphia could be next to join Stockton in declaring municipal bankruptcy

Last week, a judge ruled that Stockton, California could declare bankruptcy to seek protection from their debt and creditors, and on April 16, it has been discovered that the city of Philadelphia is also investigating bankruptcy options in lieu of their massive debt and pension obligations.



Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, will address investors at a conference financed by underwriters and closed to the public and the press.
The invitation bills tomorrow’s meeting as a chance to hear “Philadelphia leaders and investors discuss building the city’s future.”
Philadelphia is hoping to attract investors for the city, which is rated three steps above junk by Standard & Poor’s. The city and its authorities have $8.75 billion in outstanding debt as of September, according to bond documents. Philadelphia’s pension system is 47.6 percent funded this year, the documents say. - Bloomberg via Mish Shedlock

Should Philly be forced to sell city assets, or follow through with bankruptcy preceedings, then it will open the floodgates to a large number of other cities like Detroit, Camden, and perhaps even Chicago who are experiencing the same debt and underfunded pension levels.

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