Alabama county on verge of bankruptcy

July 26, 2011 at 11:56 AM   |   0 comments

BIRMINGHAM, Ala., July 26 (UPI) -- Alabama's most populous county is nearing the biggest municipal bankruptcy in U.S. history as officials say they're preparing to meet with creditors.

Jefferson County, with more than 650,000 residents and the state's biggest city, Birmingham, has failed to renegotiate $3.2 billion in debt for a major sewer construction project in the 1990s, Politico reported.

County officials, who are to meet with creditors Thursday, have asked that the sewer debt be reduced by $1.3 billion but have yet to receive a response.

Jefferson County Commissioner Sandra Little Brown predicted last week an 80 percent chance of bankruptcy.

"I am prepared to take whatever steps are deemed necessary to position us to file a Chapter 9 bankruptcy if were unable to reach a satisfactory settlement or an extension of the standstill," commission President David Carrington said.

Chapter 9 bankruptcies, available only to municipalities, allow them to restructure debts.

In March, Carrington had told the BBC, "In all sincerity, I have to say that we are bankrupt right now."

Along with the $3.2 billion sewer debt, the county owes an additional $1 billion and could not possibly pay the debts with tax increases and other ways to generate revenue, Carrington said.

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