In a decision not likely to sit well with bondholders and other creditors, the city of San Bernardino has decided to resume payments to the California Public Employees’ Retirement System (CalPERS) but to no other creditors. CalPERS, which is the city’s largest creditor, is owed more than $12 million on account of missed pension fund contributions. Going forward, the city will make the required bi-weekly $1.2 million payments, which will have no impact on the arrears owed CalPERS.
While the bankruptcy judge presiding over the city of Stockton’s bankruptcy case recently green-lit its Chapter 9 petition, San Bernardino’s petition remains up in the air. Indeed, a timeline for a final decision on the Chapter 9 petition remains unclear. Also unclear is what effect, if any, resuming payments to CalPERS will have on CalPERS’ objection to San Bernardino’s Chapter 9 petition. CalPERS had objected to San Bernardino’s Chapter 9 petition early on, yet did not object to Stockton’s Chapter 9 petition. Stockton, unlike San Bernardino, had kept current on their pension contributions to CalPERS.
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