Ala. county files for largest municipal bankruptcy

Alabama’s most populous county filed what became the largest municipal bankruptcy in U.S. history in an effort to retake control of its beleaguered sewer system and wipe away as much of its whopping $4.15 billion in debt as possible.


Jefferson County’s Chapter 9 filing on Wednesday gives it protection from creditors while it develops and negotiates a plan for adjusting its debts. It could accomplish that by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.


Perhaps the biggest is the potential impact on the county’s 658,000 residents, who could be asked to pay higher sewer rates. Officials say it’s too early to assess the full impact, though bankruptcy filings can lead to layoffs, tax increases, pension reductions for public workers, and spending cuts on things like schools and roads.

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