Search within this section
Select a section below and enter your search term, or to search all click Bankruptcies and liquidations
Favorited Content
1.10 Chapter 9 bankruptcy
Publication date: 31 Oct 2022
us Bankruptcy & liquidation guide
A financially distressed government municipality which seeks protection from its creditors while it develops and renegotiates a plan for adjusting its debts may file for bankruptcy under Chapter 9 of the Bankruptcy Code. Examples of government municipalities that may file under Chapter 9 include cities, towns, villages, counties, taxing districts, municipal utilities, and school districts. States cannot use Chapter 9. Although a Chapter 9 filing is similar to a Chapter 11 filing in certain respects, there are some key differences:
- There is not a provision for the liquidation of the bankrupt entity’s assets and subsequent distribution of the proceeds to its creditors.
- The Court is limited in its role of overseeing the bankruptcy process, as it is restricted by the Tenth Amendment to the US Constitution, which provides sovereignty to the states and limits the Federal government’s ability to interfere with states’ rights. Typically, the Court’s involvement under Chapter 9 is limited to approving the bankruptcy petition, confirming a plan of debt adjustment, and ensuring implementation of the municipality’s plan for emergence.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Link copied
