San Bernardino, California Bankruptcy

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California Lawyer
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San Bernardino, California Bankruptcy

New forum so I can colect links to stories, post commentaries, etc.

Just today, there is a story in the local paper that discusses the tension and ongoing conflict between Calpers, a massive creditor, and the City of San Bernardino, the debtor, who owes past pension payments which are huge, as well as ongoong pension payments which today are $6.9 million in arrears.

Here is the link: http://m.pe.com/penterprise/db_101732/contentdetail.htm?contentguid=CPsgufXp

The reason this particular bankruptcy is so critical is because the stakes are so hig with regard to future payments. If the city can escape the past due debts, or haircut them, or restructure them downward suficiently, then other cities all accross California will see bankruptcy as a viable option to escape their huge debts to Calpers. Calpers knows this, and wil fight this tooth and nail.

If Calpers wins, then the City will simply become a tax collector for the quasi-sovereign!CALPERS, in essence, the City will function solely as a mechanism to gather tax revenue for payment to Calpers, rather than an organization designed to provide benefits to its citizens.

It is literally a back-door tax collection scheme for payment to a special class of people. This is not going to end well for either Calpers or the City.

Since the stakes are so high, there will be lots of press coverage, and I will share what I can right here.

Edited by admin on 11/08/2014 - 06:27

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City Attorney for SB Tells Residents to "Lock and Load"

http://blog.pe.com/cassie-macduff/2012/11/29/sb-city-attorney-spouts-inflammatory-remarks-at-town-hall-meeting/

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Jim Sinclair, December 18, 2012.

California Lawyer
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Bankruptcy Case Info
U.S. Bankruptcy Court
Central District Of California (Riverside)
Bankruptcy Petition #: 6:12-bk-28006-MJ

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"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Thoughts on CalPERS vs. City of San Bernardino

I thought I understood, but now that I have read the CalPERS Motion for Relief from Stay, I am not only more aware, but I am petrified of CalPERS's power!

On November 27, 2012, CalPERS filed a Motion for Relief from Stay.  Here is the introduction from the Motion, copied directly from docket document number 228:

The California Public Employees’ Retirement System (“CalPERS”), by and through its undersigned attorneys, hereby files this Memorandum of Points and Authorities in Support of its Motion for Relief from Stay pursuant to sections 362(d)(1) and 922 of the Bankruptcy Code to allow CalPERS to pursue certain rights and remedies available to CalPERS as a result of the failure of the City of San Bernardino (the “City”) to comply with applicable California law.
 
I. Introduction 
 
By its own admission, the City has failed to make required postpetition contributions to CalPERS. The City admits that it has not paid to CalPERS any of the employer portion of its contributions during its bankruptcy case. See Press Release dated October 29, 2012, Declaration of Michael B. Lubic (“Lubic Decl.”), Exhibit “3.” Further, in its pendency plan adopted on November 26, 2012, the City has stated that is does not plan to pay CalPERS the employer portion of its contributions for the duration of this fiscal year. See Pendency Plan, Lubic Decl., Exhibit “1.”
 
The City’s failure to make these contributions is a violation of state law. Among other laws, (1) the Public Employees’ Retirement Law (CAL. GOV. CODE, § 20000 et seq.) (the “PERL”) requires that municipalities make payments to CalPERS as and when due and (2) the California Labor Code requires that employers, including municipalities, make payments to a pension fund if required to do so by agreement with its employees.
 
Pursuant to both the “police power” exception to the automatic stay and section 903 of the Bankruptcy Code, CalPERS, as an arm of the State of California, is empowered to take action against the City as a result of the City’s violation of California law without first obtaining relief from the automatic stay. Nevertheless, out of an abundance of caution, CalPERS files this motion because, even if the police power exception and section 903 do not otherwise apply, cause exists to grant CalPERS relief from the automatic stay. (Footnote 1: Because any action that CalPERS may take is not subject to the automatic stay pursuant to the police power exception provided by section 362(b)(4) and section 903 of the Bankruptcy Code, CalPERS reserves the right to commence necessary enforcement action in state court without first obtaining relief from the automatic stay.)
 
Accordingly, for the reasons set forth in more detail below, CalPERS respectfully requests that the Court grant it relief from the automatic stay to exercise certain rights and remedies available to CalPERS under applicable law. Specifically, CalPERS seeks relief from stay to commence and prosecute an action against the City to collect the “deferred” payments and all related relief including, without limitation, seeking a writ of mandamus to compel the payment of pension contributions or seeking the appointment of a receiver. At this time, CalPERS is not seeking relief from stay to terminate its relationship with the City but fully reserves all of its rights to do so at a future time.

So here is my take:

I am not going to copy and paste the whole motion.  Those that want to can login to PACER, and look at document 228 and read the motion for themselves.  Also, docket document number 228-1 is the declaration of CalPERS's counsel, authenticating some documents used in support of the motion, including the City's Pendency Plan (which is a lengthy written document and says how the City intends to pay ongoing bills), City's 10/29/2012 City of San Bernardino Cash Flow Position, and "City's Deferral of CalPERS Payments."

Basically, reading these documents makes my hair stand up in horror.  CalPERS IS THE STATE. They inserted themselves into the State's Constitution by amendment in 1992.  So what we have here is the State of California, with full force and effect of State law, coming into Federal Bankruptcy Court and telling the judge:

Hey, we don't even need to be here to get permission, but out of courtesy, we are here to make sure to also get your stamp of approval before we launch a state law lawsuit against the City, obtain a court order demanding payment of arrearages, (over $5 Million, accruing at $1.7 Million per month--remember, this is STRICTLY pension payments, nothing else, not current wages, not interest, not costs, not attorneys fees, etc., which will all be added ON TOP OF THE ARREARAGES), and appointing a receiver.  

This means that soon, CalPERS will be running the show in San Bernardino.  That means the big wigs at CalPERS, are going to basically be taking all the tax revenue from the City, not unlike a giant mafia operation that goes into a business, takes it over, loots it, then leaves a goon to keep collecting.

This is the wave of the future, and once CalPERS successfully shows how the game is played, other Cities will never want to tangle with CalPERS ever again.  That means that local tax revenues are destined to go strictly to fund pensions, and this state is hopelessly doomed beyond repair.

I need the name and phone number for a good Texas real estate agent.

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"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

Strongsidejedi
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a few thoughts

1.  Is this the reason that the MSM is not covering this issue?

2.  Has the court made a ruling on the CalPers filing? 

3.  Has CalPers made a similar filing in the matters related to the City of Stockton?  Or, has the City of Stockton continued to make payments to CalPers despite being in Chapter 9?  I was under the impression that there are trustees who must file and who have to make the payment and that the claim against the city was really a claim against the trustee (who ever the trustee is).

4.  If the federal court finds against CalPers, is CalPers a house of cards?  I see it both ways.  If CalPers is unable to prevail in this filing, then the CalPers funds could be a house of cards which public employees could see tumble.  If CalPers does prevail, then the democratic processes which should be operative have failed due to the financial mismanagement, misconduct, and worse.  The CalPers fund collapsing in value (eventually to create a huge problem for retirees) is bad enough.  But the obfuscation of the democratic republic "with which we stand" is awful.

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To answer my own questions

I have to say that the filing of a bankruptcy petition by the City of San Bernardino is one of the most troubling signs of the economic collapse in progress.

Tonight, several articles appear at the website of the Sun.

http://www.sbsun.com/ci_22125696/calpers-likely-lose-next-court-battle-san-bernardino

This article answers some of the questions that I posted earlier and it is a summary of some informed opinions about how the court would rule.  It appears most observers believe that Judge Meredith Jury will not permit the state CalPERS representations to impact this federal proceeding.

In addition, the reporter clarifies that the City of Stockton prioritized meeting its CalPERS obligation ahead of other creditors. 

But here's the key paragraphs of the story:

CalPERS, which argues that state law requires payments to the system, has an official unfunded liability of $228 million and is experiencing a low rate of return - 1 percent last year - as the number of retirees increases. Meanwhile, many of the cities whose payments fund the system are facing deep fiscal problems.

"I can't see what benefit it would be to CalPERS to cause any city to dissolve, and if we paid CalPERS what they say we owe them, we would dissolve," he said.

Read more: http://www.sbsun.com/ci_22125696/calpers-likely-lose-next-court-battle-san-bernardino#ixzz2E9hToxg4

Therefore, I feel obliged to point out something.

This judge may hold in her court the balance between a constitutional republic and a debtor slave-state.  Ruling one way would negate our constitutional law and position the outcome in the hands of the greatest debtor.

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SBPEA chimes in
The city's second-largest group of creditors have added their guns to the city's bankruptcy battle as an ally for now, pitting them against CalPERS and the San Bernardino Public Employee Association.

Read more: http://www.sbsun.com/ci_22118290/pension-bondholders-support-san-bernardino-bankruptcy-filing

 
 
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Another Blogger Weighs In

Strongsidejedi: many thanks for adding your comments here, much appreciated. This case, in my humble opinion, is absolutely KEY to our future as a state, and national economy. This discussion needs to go viral, but it will not for awhile. Hence, my desire to collect thoughts and articles.

Here is another blogger, with links to mainstream press. http://www.marketoracle.co.uk/Article37885.html

Soon, critical mass will be reached, and there will be more eyes on this whole concept about vested, entrenched public union employees, their politically unstoppable HUGE money interests backing them, and the taxpayers who are ultimately in the crosshairs.

It will reach a tipping point when the public union members fued directly with CalPers. This is a proxy war precursor to the big one: aging social security recipients, currently getting benefits versus workers still paying into the system.

If CalPERS wins this fight, then there will be an actual conflict between current public union employes, who may lose their jobs as the City simply disbands, or if the City outsources jobs to other agencies or the private sector, and retirees who are drawing pension benefits from CalPERS, who will demand payment from current public union employees, including demanding future pension benefits not be cut despite the loss of members.

This is an EPIC battle between two giants on the left. The federal govt only plays a role in the form of giving bailout cash to the state, or rounding up citizens into fema camps after the collapse.

Stay tuned for more.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Guaranteed That This, Too, Is Coming to San Bernardino Soon

Execution-style killings, homicide rates soaring, watered-down "community-based" policing, all coming to San Bernardino, as the taxpayers flee.

What happens in San Bernardino is coming to the rest of the country.  Prepare accordingly.

http://hosted.ap.org/dynamic/stories/U/US_DETROIT_HOUSE_BODIES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-05-11-41-17

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"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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RE: San Bernadino and Fleeing Oppression

CA Lawyer, I believe "as California goes, so goes the nation", but there is a limit.  At some point, there is nowhere left to flee, and folks will have to stand and fight.  Besides, some good folks do not have the money to flee, and they will have to stay and take their chances with whatever is there.  Further, what you are describing will take time to progress.  It is sort of a slow motion train wreck.  IMO, we will get economic crash and WWIII long before the San Bernadino process has time to play out in society.  We are going to get a war, and it will turn out the lights for years, if they ever come back on.  The elites want us dead.  The debt/tax weapon is plan B or C.  Plan A is the Fed with mortgaged America and lights out for good. 

DayStar

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Texas real estate?

@ CA Lawyer: I can't suggest a particular real estate agent in Texas, but -- having spent a couple of years at Johnson Space Center -- I must warn you that the insects which locals in east Texas call "palmetto bugs" are actually giant cockroaches THAT CAN FLY!!!  I suggest you look inland far enough to get away from the humidity of the Gulf.  Kerrville (west of San Antonio) is a pleasant town with good medical and educational facilities.  New Braunfels (north of San Antonio) is also pleasant and several restaurants still reflect the heritage of the area's early German settlers. Fringe benefit of low humidity is that you can defeat the Texas heat with an evaporative cooler rather than expensive mechanical air conditioning.

Thanks for keeping us up to date!

Caradoc

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Mainstream Media is Starting to Cover This

I thought it would take many more years, but no, it has gone nationwide.  Look at this Bloomberg article: 

http://www.bloomberg.com/news/2012-12-11/-822-000-worker-shows-california-leads-u-s-pay-giveaway.html

This kind of publicity is encouraging, from a waking-up-the-sheeple perspective.  Let's see what happens.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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San Berdo memories

I remember driving through San Bernardino since the 60's from the upper desert to the LA area and SB always looked so dead. Everything was a dirty brown that showed no life to the town. I am surprised San Berdo lasted as long as it did. For many years 40% of the people were on welfare! They were broke decades ago in spirit and it showed. You can't pay people to bring in a business there. Many have tried to bring up the poor conditions and bring some life back into the town but the people show their appreciation by robbing them or vandalizing them. After one-two years OR less, the business closes it doors and never returns. Filth and scum attracts filth and scum. Don't get me wrong there are some good people that still live there but they have no other place to go.

We gave up on Calif when I turned 59 and moved to the east coast (non-communist city)where there is life and greenery and people wave at you that you don't even know. That is called a friendly wave to say hi. What a far cry of many people that live under such burdens in Calif. and at the drop of a hat would rather flip you off than say excuse me that I cut you off on the freeway. 

The filth and scum in Sacramento wants the same for the people they RULE over. Take a hint and move out like many others have doing doing for decades.

Calif is a nice place to visit but I wouldn't want to live there.  That is all.

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Round One: CalPers 0, City of SB 1

http://m.sbsun.com/sbsun/db_36560/contentdetail.htm?contentguid=PZhnsrr9

Little summary there.  Basically, the bankrupcy judge rejected CalPers' argument that state law mandates the City's massive payment of arrears to CalPers despite the City's filing of bankruptcy.  The rationale is that if the City is forced to make the huge payment, then current City employees will suffer.  It was a pragmatic ruling, balancing the harms, and is the correct ruling.  This sets the stage for some Tombstone-like, simmering tension, which will take many more rounds of legal hearings before the mass casualties erupt in a blaze of violence.

In January, financial documents will have been exchanges somewhat, and the judge will get to make more rulings.

Until then, CalPers gets to consider its options, which include taking an appeal of the latest ruling, or launching a sovereignty challenge by seeking state court assistance in another forum.  If CalPers elects to file a state court challenge, that will pit the State of California, as a sovereign, against the bankruptcy judge, as an instrument of federal authority (bankruptcy is purely derived from the Constitution and solely implemented based on federal authority).

In short, CalPers could initiate the next great federalism battle, an epic, once in a lifetime Constitutional showdown.

Remember, CalPers claimed that it was dire.  Unless the City pays immediately, CalPers is in jeopardy.  If true, this is dire.  If not, which is what I firmly believe, then the bankruptcy judge's smackdown informs the rest of the insolvent cities across the state (and as well, the other cities and state-run pension funds in other states) that it is open season on CalPers to escape daunting pension obligations now and into the future.

I just cannot believe that those arogant pricks in Sacramento will sit idly by as some lowly bankruptcy judge slaps CalPers across the face like a misbehaved, spoiled child.

Oh well, wait and see . . .

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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