Municipal Bankruptcy

The idea of municipal bankruptcy is starting to circulate. What’s it mean? Municipalities can go bankrupt under Chapter 9 of the bankruptcy code. The important feature is this: municipalities’ ability to re-write collective bargaining agreements are much easier than in a corporate Chapter 11 bankruptcy and can trump state labor protections allowing cities to renegotiate unsustainable pension or other benefits packages. Care to guess how all this is going to end?

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