Business for bankruptcy lawyers, at least in Alabama, is about to get a lot better.
The Jefferson County, Ala. county commission voted this week to hire Birmingham law firm Bradley Arant Rose & White to begin work on a possible Chapter 9 bankruptcy filing. The county is in danger of defaulting on $3.2 billion in sewer debt.
Jefferson County includes Birmingham, the largest city in Alabama, and the Vulcan statue [right], the largest cast-iron statute in the world.
If Jefferson County goes through with the filing, it would be the largest municipal bond default in U.S. history, according to Bloomberg News. It would top the Washington Public Power Supply System’s $2.25 billion default in 1983 of revenue bonds sold for nuclear plants.
Jefferson County would be forced to file for bankruptcy protection if it can’t reach an agreement with creditors over how to escape from $3 billion of bonds with rising interest rates. JPMorgan Chase & Co. is the county’s lead creditor. Other creditors would include Syncora Guarantee Re Ltd. and Financial Guaranty Insurance Co., Bloomberg said. Both are New York-based reinsurance companies.
The county’s problems were caused partly because of the worldwide credit crisis, which drove higher the interest rates on the county’s outstanding auction-rate debt.
Bradley Arant bankruptcy partner Patrick Darby is advising Jefferson County, The Birmingham News reported. Lawyers from Balch & Bingham, also of Birmingham, had been advising Jefferson County on its bond situation but are no longer representing the county, the paper said.