Vallejo proposes paying some creditors only 5% to 20%

Paying creditors a fraction of money owed or suspending payments altogether were tactics used by municipalities of all sizes in the Great Depression.

Vallejo, which filed for bankruptcy in 2008, has proposed paying its unsecured creditors, who are mostly current and former employees, as little as 5% to 20% of the amount they say they are owed in a bid to return the economically shaky Bay Area bedroom community to fiscal health.

John Knox, a San Francisco lawyer representing Vallejo, said the proposal to not repay all debts is "probably rare" for a municipal bankruptcy. But he said it would save the city "tens of millions of dollars," including claims for unpaid sick leave and vacation.

Source: latimes.com

From Bob