California Guards Muni Buyers From Bankruptcy With Dibs on Taxes

August 4, 2015

In order to provide additional security for holders of municipal general obligation debt and lower borrowing costs for municipal issuers, California Governor Jerry Brown signed SB 222 into law in July 2015. The law creates a first lien priority for general obligation debt issued by California’s municipalities, which offers additional protections to holders of the state’s municipal general obligation debt in the event of a Chapter 9 bankruptcy filing. In an interview with Bloomberg, Jim Spiotto discussed the new law and its context within recent municipal bankruptcies.