Distressed Municipal Finance



We help navigate evolving law surrounding troubled municipalities, tapping deep experience in corporate trust, public finance and insolvency.

Our approach

The municipal finance marketplace is evolving and shifting as cities grapple with insolvency. Look no further than the Chapter 9 bankruptcies of Detroit, Stockton and San Bernardino to see legal and financial hurdles not seen in municipal law since the Great Depression. With the myriad of issues facing municipalities, including underfunded pension plans and OPEB obligations, this problem won’t just go away.

Investors, lenders, trustees, bondholders, bond insurers and other market players need guidance, and so far it isn’t coming from the courts. Advice is needed when the municipal debt is initially structured and sold so that the municipality and the market players understand with clarity the impact of a bankruptcy filing on the prospects for repayment. Advice is also needed when insolvency presents itself and the opportunity for restructuring whether under the Bankruptcy Code or in an out-of-court context presents itself. Advice is also needed when lending to a troubled municipality.

We’ve teamed up our nationally recognized Public Finance group with corporate trust and bankruptcy professionals. Through this multidisciplinary approach, we bring proactive thinking and a deep bench to the full range of financing and insolvency issues municipalities and those who invest in municipal securities or make loans to municipalities face in the context of:

  • Municipal restructurings, including cities, towns, municipal service districts, public hospitals and school districts
  • Municipal workouts
  • Default advice for indenture trustees and bondholders
  • Chapter 9 bankruptcy proceedings
  • Complex claims litigation in bankruptcy court
  • Chapter 9 debtor-in-possession financing, refunding bonds and exit financings
  • Appellate advocacy
  • Direct purchases of municipal securities
  • Municipal-structured swaps and other derivative products, and letters of credit
  • Claims trading
  • Conduit issuers
  • Credit enhancement
  • Public-private partnerships (PPP) including intercreditor issues

Who we work with

  • Investors/trustees
  • Bond insurers
  • Lenders
  • Underwriters/first purchasers

Representative experience

  • Representing indenture trustees in:
    • A defaulted municipal financing secured by a regional Boston hospital
    • A defaulted municipal financing secured by an affordable housing project in Little Rock, Arkansas
    • A defaulted municipal financing secured by a hazardous waste plant located in Massachusetts
    • Restructuring municipal debt funding nursing homes in New England
    • A Chapter 9 case of a South Carolina toll road concessionaire
  • Representing indenture trustees and investors in:
    • A defaulted municipal financing secured by an office park in Smithfield, Rhode Island
    • A defaulted municipal financing secured by a parking facility in Springfield, Massachusetts
    • A defaulted municipal financing secured by a charter school in New York
  • Representing bond insurers:
    • For bonds that financed the construction of a failed wine and food museum in Napa, California
    • In a Chapter 9 case involving a hospital in Mississippi
    • In a Chapter 9 case involving a California Community Services District
    • In the initial stages of a workout on defaulted bridge authority bonds
    • In analyzing rights and remedies against an Illinois municipality in default on bond obligations
    • In connection with workouts and potential Chapter 9 bankruptcy case of Jefferson County, Alabama, relative to its issuance of insurance policies for a portion of the $3.2 billion of sewer warrants issued by Jefferson County, Alabama
  • Representing clients in the following situations:
    • First purchaser of refunding bonds while issuer was in Chapter 9
    • Federal highway administrator in a Chapter 11 case of a California toll road concessionaire
    • Letter of credit provider as part of Jefferson County, Alabama, Chapter 9 bankruptcy exit financing
    • Direct loan purchase to a Pennsylvania municipal authority
    • A debtor in the New Hampshire/Vermont Solid Waste District in connection with a Chapter 9 bankruptcy proceeding and assisting in reorganization of a project leased to and operated by Waste Management
    • A client/service provider in connection with the City of Vallejo, California’s Chapter 9 bankruptcy case
    • Submitting an amicus brief in the City of Detroit Chapter 9 case

How cash-strapped Chicago snagged a triple-A rating for its new bonds

Wall Street Journal | December 03, 2017

In this article on Chicago’s $3B bond sale, New York City financial restructuring and bankruptcy partner Robert Christmas is quoted for advising the city.

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