U.S. Bankruptcy Court Judge Christopher Klein’s ruling permits Stockton to proceed with its Chapter 9 bankruptcy protection filing from last June in a case with precedent-setting potential for other cash-strapped U.S. cities.
In a lengthy preamble to his ruling, Klein said Stockton’s bondholders had failed to negotiate in good faith with the city prior to its filing for protection. He added the city was “by any measure insolvent” prior to its filing.