Third Time Is The Charm: CalPERS May Appeal City Of San Bernardino’s Bankruptcy Eligibility To Ninth Circuit

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A federal judge has ruled that CalPERS may appeal to the Ninth Circuit a bankruptcy judge’s decision allowing the City of San Bernardino’s petition for Chapter 9 bankruptcy.  As we previously reported here, U.S. Bankruptcy Judge Meredith Jury ruled in August that San Bernardino is eligible for Chapter 9 bankruptcy protection. In November, Judge Jury twice denied CalPERS’ motion for interlocutory appeal to the Ninth Circuit, prompting  CalPERS to seek relief from the U.S. District Court. On December 13, Judge Dolly Gee of the Central District of California granted CalPERS’ request to appeal, explaining that interlocutory appeal was appropriate given the lack of binding precedent on important questions of bankruptcy law presented by the case—including how to determine whether the city had demonstrated the required motivation “to effect a plan to adjust [its] debts” and whether its bankruptcy filing was made in “good faith.”  Those critical legal questions, the court ruled, should be decided by the Ninth Circuit before the case proceeds any further.

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