New York, June 27 (FinanceEnquiry.com) ? Stockton, the largest American city of ?California, has declared bankruptcy today under chapter 9 of federal bankruptcy laws after approving a special budget with $26 million in debt.
At the council meeting, the resolution approved the pendency plan to meet the day to day requirements of the city. ?Stockton city in California, has 2,91,000 inhabitants and the city manager told the meeting that the city doesn?t have? funds to settle the creditor?s dues.
?Although talks with creditors are under way, the insolvency is inevitable? City Manager Bob Deis said. He further said ?I think we?re very close in announcing some possible deals with some creditors in the future.?
The Californian council voted the pendency plan with 6 for and 1 against vote. The municipal authorities claimed that they will disburse salaries to employees and other payments to vendors and service providers. Under the pendency, the council will not be required to pay most of the other expenditures, including debt.
Earlier, many local governments such as ?Jefferson County, Alabama, with ?$4.2 billion in debt, largely due to 2008 financial crisis and also Orange County, California, with ?$1.7 billion in debt have filed bankruptcy.
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