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City becomes largest to declare bankruptcy

 

Friday 29 June 2012 20:47 BST
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Stockton, California, has now filed for Chapter 9 protection, making it the largest US city to declare bankruptcy.

City officials sought the status on Thursday night, as expected, after they were unable to reach a deal with creditors to restructure hundreds of millions of dollars of debt under a new state law designed to help municipalities avoid bankruptcy.

The river port city of 290,000 has the second-highest foreclosure rate in America. While property taxes and other revenues have declined, expensive investments and generous retiree benefits have drained city coffers.

AP

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