Birmingham, AL – Wall Street creditors are asking a judge to throw out the record bankruptcy filed by Alabama's largest county over more than $4 billion in debt.
Lenders say Alabama law doesn't allow Jefferson County to file a municipal bankruptcy. They say state law allows bankruptcy only for bonds, and the county has a different type of debt called warrants.
County attorneys disagree and are asking the court to let the case move forward. A bankruptcy judge began a hearing on the case on Thursday.
Jefferson County filed the largest municipal bankruptcy ever last month after years of negotiations failed to resolve a massive debt linked to debt for the county's sewer system.
The full impact to the county's 658,000 residents isn't yet clear, but higher sewer bills are a certainty.
(Copyright 2011 by The Associated Press. All Rights Reserved.)