SIFMA Submits Brief Supporting Finality of Substantially Consummated Chapter 9 Plan
SIFMA submitted an amicus curiae brief in support of appellant Jefferson County in Andrew Bennett v. Jefferson County, Case No. 15-11690. The case is pending before the United States Court of Appeals for the Eleventh Circuit.
On November 6, 2013, the Bankruptcy Court for the Northern District of Alabama confirmed Jefferson County's chapter 9 plan of adjustment. A group of ratepayers appealed the confirmation order to the district court, but failed to seek a stay pending appeal. Consequently, Jefferson County consummated its plan of adjustment substantially, including through the issuance of nearly $1.8 billion in new sewer revenue warrants and the adoption of an approved rate structure to generate additional revenues to meet debt service obligations on the newly issued sewer warrants. Jefferson County moved to dismiss the ratepayers' appeal as moot, but the district court denied the motion. The district court then certified the issue for immediate appeal to the Court of Appeals.
In its brief, SIFMA argued that the district court's ruling was flawed and threatened the "efficient operation of the municipal securities marketplace" by (i) jeopardizing the rights of those who invested in the warrants and discouraging investors from purchasing new bonds issued through a chapter 9 case, (ii) increasing the risks associated with a future chapter 9 debt issuance and (iii) deterring municipal debtors from seeking chapter 9 protection. SIFMA emphasized that the district court's ruling increased uncertainty in the marketplace by potentially allowing a reviewing court to strike retroactively and unwind portions of a substantially consummated chapter 9 plan. According to SIFMA, this uncertainty also could constrain a chapter 9 municipal debtors' access to the capital markets. For that reason, SIFMA urged the United States Court of Appeals for the Eleventh Circuit to reverse the district court's order and remand the issue with instructions to dismiss the ratepayers' appeal as moot.
See: SIFMA Brief; Petition: Andrew Bennett v. Jefferson County.