Largest municipal bankruptcy filed

June 30, 2012 at 11:36 AM
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STOCKTON, Calif., June 30 (UPI) -- Stockton, Calif., Mayor Ann Johnston said the city filing for bankruptcy would put the municipality back on its feet and protect its citizens.

"This is what we must do to get our fiscal house in order and protect the safety and welfare of our citizens. We will emerge from bankruptcy with a solid financial future," Johnston said in a statement.

Stockton became the largest city in the country to ever file for bankruptcy with an electronic filing late Thursday.

With the filing, it is possible that the court could lift a state-mandated gag order that has been in place for three months, covering negotiations in the state capital between city officials, union leaders, lawyers, and others, the Los Angeles Times reported.

Stockton's finances were hit with a multitude of problems, including the economic downturn, a costly waterfront development project that was financed by bonds before the economy soured and rising costs for employee medical benefits.

The foreclosure crisis and problems with corrupt or incompetent city leaders also contributed, the Times said.

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