Jefferson County, Alabama works towards negotiated settlement

Jefferson County, Alabama is continuing negotiations with creditors in order to avoid a bankruptcy filing over a $3.14 billion sewer debt that emerged in 2008.  The Governor has urged Jefferson County Commissioners to avoid Chapter 9 because he fears it will hurt the credit of the entire state. Creditors have proposed turning the sewer over to an independent authority. According to The New York Times, the new authority would issue $2.07 billion in new bonds to redeem the defaulted securities. Governor Bentley has offered to back the debt as “moral obligation” bonds which would make the state a (soft) guarantor. The deadline to arrive at an agreement is now September 16.