The bankrupt California city of Stockton began four days of hearings today aimed at confirming its restructuring plan. Until Detroit, Stockton was the country’s largest municipal bankruptcy. Now many are watching it for signs about what might be coming with Detroit’s Chapter 9 case.
In Stockton, the remaining creditor is Franklin Resources Inc. (BEN) which says it’s being unfairly treated compared to other parties owed money by the California city. Under the city’s current proposal, Franklin would get just 1 percent of the $35 million it’s owed. Bloomberg’s Steven Church reports :
Franklin says it’s being unfairly targeted: two of its funds would get only 1 percent of the $35 million they are owed under the current plan, while other creditors are due to collect anywhere from half to all of what they are owed.
While Detroit attorneys have reached a few deals with creditors, they haven’t been successful with all parties, leaving the probable situation of a contested trial on its Plan of Adjustment in July. As the Stockton situation plays out this week, it may be foretelling some of what Detroit may expect later this year.