Bankruptcy Solves Nothing

The debate over bankruptcy is a red herring. The fact is if the County could get any relief in a bankruptcy proceeding they would have filed a long time ago. A municipal bankruptcy is not like a personal or corporate bankruptcy. In a municipal bankruptcy the debt is not “forgiven” and does not go away unless the creditors agree to a plan that wipes out the debt. The creditors are not going to agree to a plan to forgive all of the County’s debt. Without a plan that both the creditors and the County agree on there is little a bankruptcy court can do and a judge has no power to order them to accept a plan.

If Jefferson County were to file a bankruptcy petition or continue to do nothing at all to solve the problem, the economic impact on this community and the state would be a financial catastrophe. It would be the largest municipal bankruptcy in the history of the country. Economic development would come to a standstill and we would likely witness the continuing decline of Jefferson County. Bankruptcy would deter new industry from locating in Alabama, and specifically Birmingham. Jefferson County would be significantly affected by its inability to borrow future funds, a low credit rating that would remain minimal for years, all while increasing borrowing costs for future debts for local municipalities and all Alabama public entities. This economic decline would lower property values across the county and the state resulting in diminished budgets and discontinued services.

This means that public funds may not be available in the future for Jefferson County schools, roads, hospitals, law enforcement, and new jobs from economic development.

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