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Friday, July 28, 2006

Less Coal! Switch Tracks! Part Duh!

When we last left the Sewerville Express (see previous posting), the residents were snoozing and reading and watching TV whilst sitting in the club car of a runaway train hurtling straight for the cliff -- again.

Last night, the unconscious engineer, who had been slumped over the wide-open throttle bleeding out on the floor from knives stuck in his back from a variety of Usual Suspects, roused up long enough to vote to send a signal to the trackman up ahead to switch tracks. Within feet of the cliff, the train lurched onto the new track and headed away from the immediate danger.

In the coal car, the battling citizens were strangely subdued, their thrashings at each other distracted and dreamlike. It was a rote slo-mo ballet of tired, muffled waffle-bat thumps instead of the usual vigorous, wood-on-skull thwacks.

Pauline and her Perils would have been proud. Close to death, our CSD Board kept their eye on the main thing and voted 4 -1 to support Assemblyman Sam Blakeslee’s bill – still subject to amendments and revisions and/or sudden death as it makes it way through the Sausage Factory of Sacramento to become law – a bill that will give the County the legal mechanism to separate out the Hideous Sewer project from the CSD’s official responsibility and control. It also sets up a process for inter-agency collaboration, community input and a final citizen’s vote on any project before anyone starts digging holes in the ground.

The bill also originally contained a lot of troubling details that an ad hoc citizen committee, the CSD and others worked hard to amend so as to get the CSD the best deal as possible without having the whole thing collapse. What now happens in Sacramento remains to be seen.

The bill also contained some very unpleasant lumps of coal for Los Osos. But those lumps existed with or without the bill and presented the community with an interesting set of Hobson’s Choices – all about equally bad and limiting in their own way – which is why I believe the CSD made a very difficult but a very smart decision by realizing that sometimes you have to lose a battle in order to say alive long enough to win the war.

Of course, since only about 50 people attended the meeting, it’s possible that the rest of the community is absolutely indifferent to lumps of any kind, even those that will have a direct and profound impact upon their home and pocketbook. Not even train wrecks or avoided train wrecks caused them to look up from their TV.

Which means that the upcoming Ripley Project Report workshop and presentation of the Wastewater Management Plan Update at the Community Center, August 4th at 6 pm, will be a real snoozer.

43 comments:

Sewertoons AKA Lynette Tornatzky said...

Yes, 50 at the meeting Ann. And that would be a very high turnout as we all know.

However Ms. Schicker, in her letter to John Decker passed out last night at the meeting, (Mr. Decker is a consultant to the Senate Appropriations Committee), states that "It is unusual for our meetings to involve fewer than 100 residents who come by to observe and participate in discussion with regard to the proposed wastewater project and other community service issues."

What do you suppose made her say that? What alternate universe is she looking into to find that statement. Disturbing really, to find our elected official fabricating so blatantly to the Senate Appropriations Committee. Disturbing, but not surprising, unfortunately.

Ms. Schicker goes on to say, "Our citizens feel that their voices are heard and respected by the district board." Yes, all 20 of the board's supporters feel that way I am sure. The rest of us however…

I had to leave after about three hours. Let me guess, it was Ms. Tacker who voted NO, yes?

Sewertoons AKA Lynette Tornatzky said...
This comment has been removed by a blog administrator.
Anonymous said...

Basically most folks are tired of the Al Barrow and the lunatic fringe show. They get up to speak as often and as
long as they can. When they don't get their chance for a sound bite ch 20 or don't get their "pertinant" questions answered they go into tirades and rage both inside and outside the meeting.

I am almost certain that there are thousands and just 20 who support this board. Rather than inspired to go forth they become disenchanted by the antics of the lunatic fringe.

Sewertoons AKA Lynette Tornatzky said...

Thank you John for your excellent assessment of the meeting. You hit it right on the head. I know you won't run for the board, but if you did, you'd have my vote!!

I had to laugh at Bleskey fluttering around trying to explain WHICH of the board packet of letters to Decker was the right one, as there were two versions - and in the end, they turned out to have identical wording, except one was called "draft" because the Xerox was dark enough to show the word! It was a regular feeding frenzy at the table to pick up the right copy.

Anonymous said...

Jon,
Your assessment of the situation is right on. I've been saying for a long time we property owners in Los Osos are getting screwed, blued and tatooed by the actions of this board and others who have no financial stake in the outcome. And the damage will be felt for years and years to come. I've always felt this idea of "community input" to be a sham, and it continues to be a sham. When a guy like Al Barrow speaks as if he's the community, it makes me wretch.

Anonymous said...

From Julie Tacker in the TT:
"Nobody knows Los Osos better than this board does..."

Like sewertoons said earlier, what alternate universe do these people live in?

Mike Green said...

Jon, come on! If you'll run, I will too! It would be a hoot! (of course I would surely loose and you'd win)
Been gone on vacation for awhile, so I'm reading like mad to get back up to speed, the support vote of BBP sounds like a positive step to me.

Mike Green said...

Panama? La Paz, Baja Ca. for me! except in summer, then maybe good ol L.O.,Who knows? Rent my place out to vacationing Japanese? (OFURO HOT TUB/MANY ORCHIDS!)
Sorry, still up from vacation! as soon as I'm done catching up I'll be as morose as usual, Good to be home though!

Mike Green said...

Besides, You would make a GREAT cesar!
Can you fiddle?

Anonymous said...

Okay Mr. Arcuni - what is THE ANSWER?

Anonymous said...

Nice! I like it!

Churadogs said...

Once again we're left with a broad question: Who in this community and this county and this country really wants anything resembling "local control?" Clearly, local control, whether it's by a CSD or a County BoS, takes involvement of the citizens. When YOU don't show up and get involved and keep a sharp eye out, and stay informed so you know what's going to be done in your name, rest assured, SOMEBODY ELSE WILL, and guess who's gonna be the squeaky wheel that'll get the grease? Not YOU, that's for sure.

The practical reality is this: In a dictatorship, you get what somebody else hands you. In a representative form of government, you have an opportunity to get what the majority of you want, UNLESS YOU ABDICATE YOUR RESPONSIBILITY TO ACTIVELY GET WHAT YOU WANT, in which case you'll get what somebody else hands you.

The choice is yours. What I see on this comment section are too many whiners and complainers who won't lift a finger, even at crucial times, to do anything but whine and complain about things OTHERS are doing to them.

I'll ask again: If 1,000 members of this community had shown up before the old board and said, Nuh-huh, We want a clear, HONEST (none ofthis "strongly held community values crap,") side by side comparison of in-town vs out of town plans followed by a 218 vote on which to select, would we be where we are today?

It's a proposal I made in a column several years ago. It could have heppened if people had gotten off their duffs and required they be given a seat at THEIR table. They didn't. Instead, they sat home, snoozing while THEIR train headed straight for the cliff. Now, when it's far too late, they whine.

Feh, Spectator, Feh!

Anonymous said...

Mr. Arcuni,

I am glad to hear you will not run for the BOD. In plain english, sir, you are a coward who has plenty to say and criticize, but no solutions or balls.

Anonymous said...

ADVANTAGES AND DISADVANTAGES OF SPECIAL DISTRICTS

Many people disagree over the usefulness and desirability of special districts. Before you make up your own mind, consider these arguments.

ADVANTAGES:

Special districts can tailor services to citizen demand.
Cities and counties must protect their residents' health, safety, and welfare and, thus, must provide many services, regardless of citizen demand. Special districts, however, only provide the services that the community desires.

Special districts can link costs to benefits.
General purpose local governments --- cities and counties --- levy general taxes to pay for public services. The services that taxpayers receive are not directly related to the amount of taxes they pay. In a special district, only those who benefit from district services pay for them. Those who do not benefit do not pay.

Special districts are responsive to their constituents.
Because most special districts are geographically smaller and have fewer residents than counties and cities, they can be more responsive to their constituents. Small groups of citizens can be quite effective in influencing special districts' decisions.









DISADVANTAGES:

Special districts can lead to inefficiency.
Many special districts provide the same services that cities and counties provide. Overlapping jurisdictions can create competition and conflict between special districts, and also between districts and general purpose governments. In addition, when communities incorporate, some Local Agency Formation Commissions (LAFCOs) fail to dissolve the special districts that exist within the new city boundaries, resulting in duplicated services.

Special districts can hinder regional planning.
Having numerous special districts can hamper planning efforts. For example, it can be difficult to organize the various water, sewer, and fire services in one region to provide equitable services for all residents. Because about 2/3 of the districts have independent governing boards, there is no single agency which can guarantee a coordination of efforts.

Special districts can decrease accountability.
The multiplicity of limited purpose special districts can make it harder for citizens to gather information. Separate special districts may provide water, sewer, parks, library, and fire protection services to the same unincorporated community. Residents have a hard time finding out who’s in charge. Furthermore, the narrow and technical nature of a district’s activities often results in special districts with low visibility until a crisis arises. Special district elections typically have very low voter turnout. Although some view low voter turnout as a sign of voter satisfaction, representative democracy requires broad participation.

............

and then there is the LOCSD.

Anonymous said...

forgot to give the credit

www.sen.ca.gov/locgov/WSSASDREPORT.HTM

Anonymous said...

Anon 11:51, (franc):
Gawd your message was funny!!!! Mr. Arcuni "has no balls" but you sign your comment "anonymous." What a spineless twit you are!!

Anonymous said...

CHAPTER 9 BASICS:

The first municipal bankruptcy legislation was enacted in 1934 during the Great Depression. Pub. L. No. 251, 48 Stat. 798 (1934). Although Congress took care to draft the legislation so as not to interfere with the sovereign powers of the states guaranteed by the Tenth Amendment to the Constitution, the Supreme Court held the 1934 Act unconstitutional as an improper interference with the sovereignty of the states. Ashton v. Cameron County Water Improvement Dist. No. 1, 298 U.S. 513, 532 (1936). Congress enacted a revised Municipal Bankruptcy Act in 1937, Pub. L. No. 302, 50 Stat. 653 (1937), which was upheld by the Supreme Court. United States v. Bekins, 304 U.S. 27, 54 (1938). The law has been amended several times since 1937. In the more than 60 years since Congress established a federal mechanism for the resolution of municipal debts, there have been fewer than 500 municipal bankruptcy petitions filed. Although chapter 9 cases are rare, a filing by a large municipality can— like the 1994 filing by Orange County, California—involve many millions of dollars in municipal debt.

Purpose of Municipal Bankruptcy

The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.

Although similar to other chapters in some respects, chapter 9 is significantly different in that there is no provision in the law for liquidation of the assets of the municipality and distribution of the proceeds to creditors. Such a liquidation or dissolution would undoubtedly violate the Tenth Amendment to the Constitution and the reservation to the states of sovereignty over their internal affairs. Indeed, due to the severe limitations placed upon the power of the bankruptcy court in chapter 9 cases (required by the Tenth Amendment and the Supreme Court's decisions in cases upholding municipal bankruptcy legislation), the bankruptcy court generally is not as active in managing a municipal bankruptcy case as it is in corporate reorganizations under chapter 11. The functions of the bankruptcy court in chapter 9 cases are generally limited to approving the petition (if the debtor is eligible), confirming a plan of debt adjustment, and ensuring implementation of the plan. As a practical matter, however, the municipality may consent to have the court exercise jurisdiction in many of the traditional areas of court oversight in bankruptcy, in order to obtain the protection of court orders and eliminate the need for multiple forums to decide issues.

Eligibility

Only a "municipality" may file for relief under chapter 9. 11 U.S.C. § 109(c). The term "municipality" is defined in the Bankruptcy Code as a "political subdivision or public agency or instrumentality of a State." 11 U.S.C. § 101(40). The definition is broad enough to include cities, counties, townships, school districts, and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities, and gas authorities.

Section 109(c) of the Bankruptcy Codes sets forth four additional eligibility requirements for chapter 9:

1. the municipality must be specifically authorized to be a debtor by State law or by a governmental officer or organization empowered by State law to authorize the municipality to be a debtor;
2. the municipality must be insolvent, as defined in 11 U.S.C. § 101(32)(C);
3. the municipality must desire to effect a plan to adjust its debts; and
4. the municipality must either:
obtain the agreement of creditors holding at least a majority in amount of the claims of each class that the debtor intends to impair under a plan in a case under chapter 9;
negotiate in good faith with creditors and fail to obtain the agreement of creditors holding at least a majority in amount of the claims of each class that the debtor intends to impair under a plan;
be unable to negotiate with creditors because such negotiation is impracticable; or
reasonably believe that a creditor may attempt to obtain a preference
Commencement of the Case

Municipalities must voluntarily seek protection under the Bankruptcy Code. 11 U.S.C. §§ 303, 901(a). They may file a petition only under chapter 9. A case under chapter 9 concerning an unincorporated tax or special assessment district that does not have its own officials is commenced by the filing of a voluntary "petition under this chapter by such district's governing authority or the board or body having authority to levy taxes or assessments to meet the obligations of such district." 11 U.S.C. § 921(a).

A municipal debtor must file a list of creditors. 11 U.S.C. § 924. Normally, the debtor files the list of creditors with the petition. However, the bankruptcy court has discretion to fix a different time if the debtor is unable to prepare the list of creditors in the form and with the detail required by the Bankruptcy Rules at the time of filing. Fed. R. Bankr. P. 1007.

Assignment of Case to a Bankruptcy Judge

One significant difference between chapter 9 cases and cases filed under other chapters is that the clerk of court does not automatically assign the case to a particular judge. "The chief judge of the court of appeals for the circuit embracing the district in which the case is commenced [designates] the bankruptcy judge to conduct the case." 11 U.S.C. § 921(b). This provision was designed to remove politics from the issue of which judge will preside over the chapter 9 case of a major municipality and to ensure that a municipal case will be handled by a judge who has the time and capability of doing so.

Notice of Case/ Objections/ Order for Relief

The Bankruptcy Code requires that notice be given of the commencement of the case and the order for relief. 11 U.S.C. § 923. The Bankruptcy Rules provide that the clerk, or such other person as the court may direct, is to give notice. Fed. R. Bankr. P. 2002(f). The notice must also be published "at least once a week for three successive weeks in at least one newspaper of general circulation published within the district in which the case is commenced, and in such other newspaper having a general circulation among bond dealers and bondholders as the court designates." 11 U.S.C. § 923. The court typically enters an order designating who is to give and receive notice by mail and identifying the newspapers in which the additional notice is to be published. Fed. R. Bankr. P. 9007, 9008.

The Bankruptcy Code permits objections to the petition. 11 U.S.C. § 921(c). Typically, objections concern issues like whether negotiations have been conducted in good faith, whether the state has authorized the municipality to file, and whether the petition was filed in good faith. If an objection to the petition is filed, the court must hold a hearing on the objection. Id. The court may dismiss a petition if it determines that the debtor did not file the petition in good faith or that the petition does not meet the requirements of title 11. Id.

If the petition is not dismissed upon an objection, the Bankruptcy Code requires the court to order relief, allowing the case to proceed under chapter 9. 11 U.S.C. § 921(d).

Automatic Stay

The automatic stay of section 362 of the Bankruptcy Code is applicable in chapter 9 cases. 11 U.S.C. §§ 362(a), 901(a). The stay operates to stop all collection actions against the debtor and its property upon the filing of the petition. Additional automatic stay provisions are applicable in chapter 9 that prohibit actions against officers and inhabitants of the debtor if the action seeks to enforce a claim against the debtor. 11 U.S.C. § 922(a). Thus, the stay prohibits a creditor from bringing a mandamus action against an officer of a municipality on account of a prepetition debt. It also prohibits a creditor from bringing an action against an inhabitant of the debtor to enforce a lien on or arising out of taxes or assessments owed to the debtor.

Section 922(d) of title 11 limits the applicability of the stay. Under that section, a chapter 9 petition does not operate to stay application of pledged special revenues to payment of indebtedness secured by such revenues. Thus, an indenture trustee or other paying agent may apply pledged funds to payments coming due or distribute the pledged funds to bondholders without violating the automatic stay.

Proofs of Claim

In a chapter 9 case, the court fixes the time within which proofs of claim or interest may be filed. Fed. R. Bankr. P. 3003(c)(3). Many creditors may not be required to file a proof of claim in a chapter 9 case. For example, a proof of claim is deemed filed if it appears on the list of creditors filed by the debtor, unless the debt is listed as disputed, contingent, or unliquidated. 11 U.S.C. § 925. Thus, a creditor must file a proof of claim if the creditor's claim appears on the list of creditors as disputed, contingent, or unliquidated.

Court's Limited Power

Sections 903 and 904 of the Bankruptcy Code are designed to recognize the court's limited power over operations of the debtor.

Section 904 limits the power of the bankruptcy court to "interfere with – (1) any of the political or governmental powers of the debtor; (2) any of the property or revenues of the debtor; or (3) the debtor's use or enjoyment of any income-producing property" unless the debtor consents or the plan so provides. The provision makes it clear that the debtor's day-to-day activities are not subject to court approval and that the debtor may borrow money without court authority. In addition, the court cannot appoint a trustee (except for limited purposes specified in 11 U.S.C. § 926(a)) and cannot convert the case to a liquidation proceeding.

The court also cannot interfere with the operations of the debtor or with the debtor's use of its property and revenues. This is due, at least in part, to the fact that in a chapter 9 case, there is no property of the estate and thus no estate to administer. 11 U.S.C. § 902(1). Moreover, a chapter 9 debtor may employ professionals without court approval, and the only court review of fees is in the context of plan confirmation, when the court determines the reasonableness of the fees.

The restrictions imposed by 11 U.S.C. § 904 are necessary to ensure the constitutionality of chapter 9 and to avoid the possibility that the court might substitute its control over the political or governmental affairs or property of the debtor for that of the state and the elected officials of the municipality.

Similarly, 11 U.S.C. § 903 states that "chapter [9] does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of the municipality, including expenditures for such exercise," with two exceptions – a state law prescribing a method of composition of municipal debt does not bind any non-consenting creditor, nor does any judgment entered under such state law bind a nonconsenting creditor.

Role of the U.S. trustee/bankruptcy administrator

In a chapter 9 case, the role of the U.S. trustee (or the bankruptcy administrator in North Carolina or Alabama) (1) is typically more limited than in chapter 11 cases. Although the U.S. trustee appoints a creditors' committee, the U.S. trustee does not examine the debtor at a meeting of creditors (there is no meeting of creditors), does not have the authority to move for appointment of a trustee or examiner or for conversion of the case, and does not supervise the administration of the case. Further, the U.S. trustee does not monitor the financial operations of the debtor or review the fees of professionals retained in the case.

Role of Creditors

The role of creditors is more limited in chapter 9 than in other cases. There is no first meeting of creditors, and creditors may not propose competing plans. If certain requirements are met, the debtor's plan is binding on dissenting creditors. The chapter 9 debtor has more freedom to operate without court-imposed restrictions.

In each chapter 9 case, however, there is a creditors' committee that has powers and duties that are very similar to those of a committee in a chapter 11 case. These powers and duties include selecting and authorizing the employment of one or more attorneys, accountants, or other agents to represent the committee; consulting with the debtor concerning administration of the case; investigating the acts, conduct, assets, liabilities, and financial condition of the debtor; participating in the formulation of a plan; and performing such other services as are in the interest of those represented. 11 U.S.C. §§ 901(a), 1103.

Intervention/Right of Others to be Heard

When cities or counties file for relief under chapter 9, there may be a great deal of interest in the case from entities wanting to appear and be heard. The Bankruptcy Rules provide that "[t]he Secretary of the Treasury of the United States may, or if requested by the court shall, intervene in a chapter 9 case." Fed. R. Bankr. P. 2018(c). Further, "[r]epresentatives of the state in which the debtor is located may intervene in a chapter 9 case." Id. In addition, the Bankruptcy Code permits the Securities and Exchange Commission to appear and be heard on any issue and gives parties in interest the right to appear and be heard on any issue in a case. 11 U.S.C. §§ 901(a), 1109. Parties in interest include municipal employees, local residents, non-resident owners of real property, special tax payers, securities firms, and local banks.

Powers of the Debtor

Due to statutory limitations placed upon the power of the court in a municipal debt adjustment proceeding, the court is far less involved in the conduct of a municipal bankruptcy case (and in the operation of the municipal entity) while the debtor's financial affairs are undergoing reorganization. The municipal debtor has broad powers to use its property, raise taxes, and make expenditures as it sees fit. It is also permitted to adjust burdensome non-debt contractual relationships under the power to reject executory contracts and unexpired leases, subject to court approval, and it has the same avoiding powers as other debtors. Municipalities may also reject collective bargaining agreements and retiree benefit plans without going through the usual procedures required in chapter 11 cases.

A municipality has authority to borrow money during a chapter 9 case as an administrative expense. 11 U.S.C. §§ 364, 901(a). This ability is important to the survival of a municipality that has exhausted all other resources. A chapter 9 municipality has the same power to obtain credit as it does outside of bankruptcy. The court does not have supervisory authority over the amount of debt the municipality incurs in its operation. The municipality may employ professionals without court approval, and the professional fees incurred are reviewed only within the context of plan confirmation.

Dismissal

As previously noted, the court may dismiss a chapter 9 petition, after notice and a hearing, if it concludes the debtor did not file the petition in good faith or if the petition does not meet the requirements of chapter 9. 11 U.S.C. § 921(c). The court may also dismiss the petition for cause, such as for lack of prosecution, unreasonable delay by the debtor that is prejudicial to creditors, failure to propose or confirm a plan within the time fixed by the court, material default by the debtor under a confirmed plan, or termination of a confirmed plan by reason of the occurrence of a condition specified in the plan. 11 U.S.C. § 930.

Treatment of Bondholders and Other Lenders

Different types of bonds receive different treatment in municipal bankruptcy cases. General obligation bonds are treated as general debt in the chapter 9 case. The municipality is not required to make payments of either principal or interest on account of such bonds during the case. The obligations created by general obligation bonds are subject to negotiation and possible restructuring under the plan of adjustment.

Special revenue bonds, by contrast, will continue to be secured and serviced during the pendency of the chapter 9 case through continuing application and payment of ongoing special revenues. 11 U.S.C. § 928. Holders of special revenue bonds can expect to receive payment on such bonds during the chapter 9 case if special revenues are available. The application of pledged special revenues to indebtedness secured by such revenues is not stayed as long as the pledge is consistent with 11 U.S.C. § 928 [§ 922(d) erroneously refers to § 927 rather than § 928], which insures that a lien of special revenues is subordinate to the operating expenses of the project or system from which the revenues are derived. 11 U.S.C. § 922(d).

Bondholders generally do not have to worry about the threat of preference liability with respect to any prepetition payments on account of bonds or notes, whether special revenue or general obligations. Any transfer of the municipal debtor's property to a noteholder or bondholder on account of a note or bond cannot be avoided as a preference, i.e., as an unauthorized payment to a creditor made while the debtor was insolvent. 11 U.S.C. § 926(b).

Plan for Adjustment of Debts

The Bankruptcy Code provides that the debtor must file a plan. 11 U.S.C. § 941. The plan must be filed with the petition or at such later time as the court fixes. There is no provision in chapter 9 allowing creditors or other parties in interest to file a plan. This limitation is required by the Supreme Court's pronouncements in Ashton, 298 U.S. at 528, and Bekins, 304 U.S. at 51, which interpreted the Tenth Amendment as requiring that a municipality be left in control of its governmental affairs during a chapter 9 case. Neither creditors nor the court may control the affairs of a municipality indirectly through the mechanism of proposing a plan of adjustment of the municipality's debts that would in effect determine the municipality's future tax and spending decisions.

Confirmation Standards

The standards for plan confirmation in chapter 9 cases are a combination of the statutory requirements of 11 U.S.C. § 943(b) and those portions of 11 U.S.C. § 1129 (the chapter 11 confirmation standards) made applicable by 11 U.S.C. § 901(a). Section 943(b) lists seven general conditions required for confirmation of a plan. The court must confirm a plan if the following conditions are met:

1. the plan complies with the provisions of title 11 made applicable by sections 103(e) and 901;
2. the plan complies with the provisions of chapter 9;
3. all amounts to be paid by the debtor or by any person for services or expenses in the case or incident to the plan have been fully disclosed and are reasonable;
4. the debtor is not prohibited by law from taking any action necessary to carry out the plan;
5. except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that on the effective date of the plan, each holder of a claim of a kind specified in section 507(a)(1) will receive on account of such claim cash equal to the allowed amount of such claim;
6. any regulatory or electoral approval necessary under applicable nonbankruptcy law in order to carry out any provision of the plan has been obtained, or such provision is expressly conditioned on such approval; and
7. the plan is in the best interests of creditors and is feasible.
11 U.S.C. § 943(b).

Section 943(b)(1) requires as a condition for confirmation that the plan comply with the provisions of the Bankruptcy Code made applicable by sections 103(e) and 901(a) of the Bankruptcy Code. The most important of these for purposes of confirming a plan are those provisions of 11 U.S.C. § 1129 (i.e., § 1129(a)(2), (a)(3), (a)(6), (a)(8), (a)(10)) that are made applicable by 11 U.S.C. § 901(a). Section 1129(a)(8) requires, as a condition to confirmation, that the plan has been accepted by each class of claims or interests impaired under the plan. Therefore, if the plan proposes treatment for a class of creditors such that the class is impaired (i.e., the creditor's legal, equitable, or contractual rights are altered), then that class's acceptance is required. If the class is not impaired, then acceptance by that class is not required as a condition to confirmation. Under 11 U.S.C. § 1129(a)(10), the court may confirm the plan only if, should any class of claims be impaired under the plan, at least one impaired class has accepted the plan. If only one impaired class of creditors consents to the plan, plan confirmation is still possible under the "cram down" provisions of 11 U.S.C. § 1129(b). Under "cram down," if all other requirements are met except the § 1129(a)(8) requirement that all classes either be unimpaired or have accepted the plan, then the plan is confirmable if it does not discriminate unfairly and is fair and equitable.

The requirement that the plan be in the "best interests of creditors" means something different under chapter 9 than under chapter 11. Under chapter 11, a plan is said to be in the "best interest of creditors" if creditors would receive as much under the plan as they would if the debtor were liquidated. 11 U.S.C. § 1129(a)(7)(A)(ii). Obviously, a different interpretation is needed in chapter 9 cases because a municipality's assets cannot be liquidated to pay creditors. In the chapter 9 context, the "best interests of creditors" test has generally been interpreted to mean that the plan must be better than other alternatives available to the creditors. See 6 COLLIER ON BANKRUPTCY § 943.03[7] (15th ed. rev. 2005). Generally speaking, the alternative to chapter 9 is dismissal of the case, permitting every creditor to fend for itself. An interpretation of the " best interests of creditors" test to require that the municipality devote all resources available to the repayment of creditors would appear to exceed the standard. The courts generally apply the test to require a reasonable effort by the municipal debtor that is a better alternative for its creditors than dismissal of the case. Id.

Parties in interest may object to confirmation, including creditors whose claims are affected by the plan, an organization of employees of the debtor, and other tax payers, as well as the Securities and Exchange Commission. 11 U.S.C. §§ 901(a), 943, 1109, 1128(b).

Discharge

A municipal debtor receives a discharge in a chapter 9 case after: (1) confirmation of the plan; (2) deposit by the debtor of any consideration to be distributed under the plan with the disbursing agent appointed by the court; and (3) a determination by the court that securities deposited with the disbursing agent will constitute valid legal obligations of the debtor and that any provision made to pay or secure payment of such obligations is valid. 11 U.S.C. § 944(b). Thus, the discharge is conditioned not only upon confirmation, but also upon deposit of the consideration to be distributed under the plan and a court determination of the validity of securities to be issued.

There are two exceptions to the discharge in chapter 9 cases. The first is for any debt excepted from discharge by the plan or order confirming the plan. The second is for a debt owed to an entity that, before confirmation of the plan, had neither notice nor actual knowledge of the case. 11 U.S.C. § 944(c).

At any time within 180 days after entry of the confirmation order, the court may, after notice and a hearing, revoke the order of confirmation if the order was procured by fraud. 11 U.S.C. §§ 901(a), 1144.


...

There is no substitute for competent legal counsel

Churadogs said...

Spectator sez:"Most of the time I give a hard dose of reality, and I own 2 pieces of property in the PZ. I have a vested interest. If I was not moving to Panama, I would consider it my civic duty to run for the board."

Are you joking? Are you really selling up and moving to Panama?

Shark Inlet said...

Ann,

The problem isn't that there isn't civic-mindedness and a willingness to participate in local government on the part of our community ... the problem is that a few folks (Keith and Julie come to mind) seem to be willing to stop at nothing to get their way. To me it seems that they are self-centered, self-absorbed and simply un-open to reason. They've decided that an acceptable political strategy is to belittle and harangue well-meaning folks they disagree with. Hell, even Lisa has jumped on the boat.

The best argument for dissolution that I can think of is that those currently running the nut house shouldn't be allowed to continue making efforts to keep the good efforts of volunteers from making any difference. For example, since the finance and wastewater committees have been re-formed, how much support from this board and the GM have they been given? Has the finance committee been given any information about the state of the LOCSD budget even yet? Has the wastewater committee been given any cost estimates of any alternative project? Hell, even if the blessed Ripley report isn't finished they should have been given preliminary estimates back in December of the likely costs associated with out-of-town/STEP/ponding. If Rob Miller can work with Darrin Polhemous and Lisa to pencil out various costs, shouldn't those cost estimates have been given to the people of our community so that way we could participate?

If they want participation they need to stop hoarding all the information. Information is power and this CSD board doesn't want others to have any.

Harumph!

Anonymous said...

Anon 12:33,says,

"You sign , Anonymous"

So, where's your name, hotshot, o'noble warrior, with empty sac?

Anonymous said...

Hemingway lives still!

When's the housewarming?

Anonymous said...

Thanks for the excellent review of Panama. I've heard wonderful things about it as a retirement place. Just curious, have you heard anything about Roaton? Near Honduras, I think.

Shark Inlet said...

So Spectator ...

Are you willing to entertain guests?

Sounds like a great place to live and even if some of us cannot live there, we would certainly like to visit!

I also want to visit and/or live for 6 month time periods in: Argentina, Singapore, Australia, Thailand, New Zealand, India and South Africa.

You would be stop number six on my round-the-world trip.

Anonymous said...

At least you got an invite, Spectator;

Agree about Los Osos long-term. In 20 years, the property values may very well exceed San Luis & Morro Bay.

It is quiet, it has it's own water supply (so long as the natives stop mucking it up). No AC and little heat needed with good insulation.

In Clovis last week, 115 degrees, asphalt at ???. Miserable, the view of the Sierras diminishes each passing year above the smog.

Los Angeles will duke it out with Las Vegas & Phoenix & the rest of the State for the Sierra run-off.

The blame is endless in Los Osos; someone who put away $25/month investing starting in 1976 for waste would now have any assesment needed and could probably take a month off in Panama to celebrate.

Someone who bought in 1996 and put away $100/month starting in 1996 for waste would now have the assesment required and more equity than they will ever need. How could those with such supposedly superior intellect of wastewater treatment not realize their responsibility to themselves and neighbors to do this?

And that is the affordibility study in a nutshell.

And so there is a demand to tell the State legislature that it must put a limit on cost, and guarantee affordibility. This would go to the appropriations committee, which will then identify that there is an unlimited and unidentified financial cost to the State, and the legislation will die. The result, as usual, would be to do nothing.

Those that buy now, will they start putting away $200/month on top of their purchase to pay for waste??

Churadogs said...

Spectator sez:"Ann: I will help shape the nation of Panama, make it the largest producer of ethanol in the world through cane production, and make sure the people are the best educated in the world as far as science, banking, and technology is concerned. And I WILL die fighting a monster fish, but not before I and my friends have put it all in motion. Ahhhhh! Bullcrap! We shall see, actually your kids will see."

Hooray for you! Your plans sound absolutely grand and everyone on this blog wish you the very best of luck! Just be sure to go buy some cool socks AND plus fours. Dazzle the good folks of Panama.

Spectator also said:"To those in the PZ I say hold tight, if you can't afford the sewer bill, reverse mortgage your home, and wait a few years for the sewer to be built, and watch your home value climb in value far more than you will be taking out of the value with the reverse mortgage. Stick tight, as we get older, senior assisted living is on the horizon, and your home will be of no value to YOU as a habitation. However, you will need a good hunk of money for senior assisted living, and your home, or the land that it is on, will be of great value to some baby boomer family for retirement. That is where the money for assisted living will come from. Even if you decide to stay because your health is good, your home will never be taken from you, and you can die in bed, in your own home, surrounded by your own family."

Reverse mortgages only work for those over 62 with enough equity in their homes to make it work. If your a working family things are sure to get waaaayyy tougher. But Spectator is right for those who qualify, it's certainly an option. Also, Los Osos is surrounded by state parks or greenbelts and fits the definition of Will Roger's dad's advice:"Son, buy land. They're not making any more of it." Homeowners here are sitting on a gold mine. The sewer issues will be solved if everybody stays sane, informed, involved and "scientific," then we can move onto the next issue, like figuring out how to descend en mass on Spectator for a visit.

Anonymous said...

"Reverse mortgages only work for those over 62 with enough equity in their homes to make it work. If your a working family things are sure to get waaaayyy tougher"

OK, those over 62, when did they buy?? 1990, 16 years ago, they should be sitting on LOTs of equity, except the failure to put in a sewer has eroded some of that. How could they not have factored in a sewer?

If they bought in 2000, how could they not have factored a sewer going in, and still they would have LOTs of equity.

A working family could have chosen to buy in Paso, Oceano, wherever, the same applies. Or if you rent in Morro Bay, welcome to high water bills.

Anytime you buy or move, you know what you are getting into, this isn't the USSR where the gov't gives you 800 sq. ft. in a drab building.

People have been NOT paying for 30 years (except for septic maintenance - except for some who have had to fork over to replace).

Affordible housing and a sewer are two different issues.

It doesn't mean you try to get the cost low, or have special assistance programs, but don't mix apples and oranges.

Anonymous said...

It doesn't mean you don't try to get the cost low, or have special assistance programs, but don't mix apples and oranges

Anonymous said...

"...family moving in.." ?

she's not charging them rent?

Hopefully they will - if not, what a family.

Anonymous said...

PW says,

"Anytime you buy or move, you know what you are getting into"

That's only true if the title company/county/realtor has provided you with all the relevant infomation with regard to your purchase.

I think that if the long standing claims of the RWQCB that were used to justify the CDOs of today were not disclosed to a recent purchaser of property in the PZ, then a title insurance claim may be in order. In fact, since the county has approved the sale (which requires a certification that septic systems are A-OK prior to purchase) and collected taxes (for the higher assessed tax basis) on property in the PZ, a claim against the county can be made that they must foot the bill for any pumping scheme costs incurred by the purchaser.

To my knowledge, no one ever disclosed to recent purchasers that use of a septic system was in violation of a RWQCB order. Most knew a sewer system was being planned and that they would have to pay for it, but they did not know that they were potential targets of a CDOs and forced eviction.

Anonymous said...

What law or code of law are you referring to that says the County approves sales? Does the lendor or County require an inspection of the Septic Tank in addition to to the termite report, and what has that got to do with anything?

Disclosure - depends on who is responsible for knowing what, and when. Buyer beware.

Why would a realtor disclose that a buyer is a potential target of a CDO if a sewer was being planned or under construction??

Could the recall have been a some vast conspiracy to target realtors in a 'gotcha' exercise?

In the worst case, who loses is mass forfeitures?? LENDERS AND HOMEOWNERS.

Mike Green said...

Publickworks, (or the one that shall be known as (possibly) "The Winner of the Doughnuts")Decreed:
"Disclosure - depends on who is responsible for knowing what, and when. Buyer beware."
Who boy! you haven't puchased property lately, have you?
Certainly, the Disclosure laws would apply!
But, it could very well cost the previous owner the "nut"
Seller, BEWARE!

Mike Green said...

Still, even if a seller disclosed that the potential cost per month for the sewer saga is going to cost, (whatever pumping would cost, 300/2mo?), It would still be a good deal compared to other places that have high heating and cooling costs.
Reality check folks, we live in a paradise.

Anonymous said...

Yes, Mike;

Where else can one get a delicious maple bar on 1/1/2010 for free and savor it while awaiting for a sewer to go in sometime around 2012 or later.

Double or nothing??

Do they have maple bars in Panama?

Mike Green said...

I'm for La Paz, Baja Ca! I don't trust any Panamanian to make good maple bars!
Besides, you can drive there!

Mike Green said...

Jon, I've realy enjoyed your last posts, Thanks, Mike Green

Mike Green said...

Publickworks, double or nothing? No thanks. I'd rather loose small!

Anonymous said...

It appears that it is hat in hand with bowed head time.
Mr. Arcuni...I addressed a nasty comment in your direction, mistakedly. It wasn't meant for you and I am terribly sorry for the error. I don't even know you, but after reading your post you appear to a fine person and upstanding member of your community with compassion for the folks that maybe worried sick over the problems in LoSo.
Hopelully you never saw the comment, but if you did I beg for your understanding that it was an error on my part.
Best of luck on your exciting adventure.

Mike Green said...

Spectator speculated:
"If there is only ONE thing clear, it is that we should never been put into this dilemma. The causes are clear with 20/20 hindsight."
A BIG AMEN to that brother, I'll see you at the meeting! You like to fish? Me too! I'm nearing the completion of refitting a Searay cruiser, That is if the G.D. Government will allow it! (fishing that is) I'm in other fights besides this one.

Churadogs said...

Spectator sez:"On Friday there will be a presentation of the Ripley group, and it is NOT a board meeting, as far as I can tell, where questions and comments are limited. I will be asking questions as to time line and costs, and most importantly, if they intend to refund any funds payed by the LOCSD to them if their plan, should it be adopted, is not approved by the CCRWQCB. I will also ask them for a completion bond to indemnify the property owners for funds lost, possible individual CDOs, etc. This firm may not be bondable for 20 million and our damages may far exceed that if their solution does not pass muster. We have been down this STEP road before."

Woa, you're way ahead of yourself here. The report presented on Friday is 1) an update of the sewer report, listing a variety of options and costs etc. and 2) Riples reccomendation. That info then will probably wander around until it goes to the county and they'll mush it around as well and if it survives the county's mushing, it may reappear on a Prop 218 ballot at some point in some form. I suppose the CSD could give a voice vote on "supporting the concept," but there is no RFP or contract to build anything. Ripley did what he was hired to do -- update the wastewater report.

But I urge everyone to attend Friday's meeting and ask questions, even if they're in written form. Last time, Lisa went through them all, so now's your chance. And if you can't get full technical answers, maybe you can attend some wastewater committee meetings and ask them there.

Spectator also sez:"I will be glad to tell all why, and will attempt to do so with reason. I will also admit that she discussed this with me, and wanted my opinion before she wrote the article."

Uh, sorry to disappoint you, but when we talked the column had already been written and turned in. But thanks for your comments anyway.

Spectator also sez:"And WATER is the name of the game. When we look fifty years into the future, Racano has foresight."

Bingo. Water and ENERGY costs needed to treat, transport, clean, reuse . . . WATER. That's the future that will eat us alive if we don't re-think what and how we do things. That's why I hope everyone will attend Friday's meeting and think about the larger point to what Ripley's proposing.

Shark Inlet said...

Okay, I get it.

If energy costs skyrocket the lifecycle cost of an out-of-town ponding ag-exchange plant may be lower than TriW, even if you incorporate delay, inflation and the cost of financing.

Even so, how does that justify a choice to use STEP over gravity? (Note: STEP/STEG and gravity systems both use energy unless the WWTF is downhill of every home in the community.) If STEP would require us individually paying $5k to replace our tanks that's a $25M investment ... there is no way we'll save $25M on the pipe install.

Even so, how does the Ripley ag-exchange plan help our saltwater intrusion problem which is even bigger than our nitrate problem? It doesn't. Furthermore, with each year that passes without dealing with the saltwater intrusion problem (something that the TriW plan did in part) our likelihood of needing state water increases. I guess that is another cost of the recall vote ... the need to pay for state water.

Essentially the $64k question is this ... how do you know, Ann, that energy costs will skyrocket so much that the out-of-town plant will cost us less. By my back-of-the-envelope calculations, the cost of energy would need to rise some 400% (think $17/gal for gas) before we'll save money.

I have no problem with saving energy. I dream of the day when I can afford to put a solar system on my roof to cover my electricity needs.

I do have a problem with you insisting I buy a $25k hybrid car instead of buying an older nissan for $5k just so that I can save money on gas? Perhaps I cannot afford the fancier car.

Mike Green said...

Sharkey, I might be wrong here, but I was at the first Ripley meeting and saltwater intrusion was discussed. As I understood it the ag exchange would help if not stop the problem by stopping the pumping of the aquifer under the farms, also conservation was highly reccomended in order to slow the drawdown of the lower aquifer, 100% reuse of the wastewater was the goal, along with reduced overhead costs (in comparison with TriW).

*PG-13 said...

Still on the road. It's hard to leave LO but once away - way over the rainbow and far beyond the LOVR & SLO terminus - distance (and time) serve to buffer the usual daily static and gives opportunity to see things differently. Road trips are good for many more things than they are typically given credit for. Being unplugged is also therapeutic. I'm not completely off the grid, I'm just too busy to plug in. When I do occasionally plug in every 5-6 days I'm aghast at the jetsam and flotsam collecting at an alarming rate in my Inbox. An unwatched mailbox is a very scary thing. It might just be easier to waste my old life and begin anew with a new identity and new email address. A clean slate is deliciously tempting. If identity theft is so easy and so prevalent it would seem forging a brand new identity shouldn't be too much more difficult.

Like Mike, I'm trying to catch up. Imagine having few sewer-related thoughts and even less sewer-related contact for many weeks and then, when you finally do plug back in for just a peek, you land on this thread? Maybe its just me and the distance and the time but it seems the animus is down and there is a little more civility if not some understanding and appreciation. Not sure what to make of it. Is this just a lull in the storm? Have the sewer wars reached an impasse where the sides get to take a little break and breathe and enjoy the beauty of the battlefield? Is the sewer now so far beyond any local control that its fate is no longer ours to manage and argue over? There is still a good deal of heated discussion certainly but the temperature feels a little cooler, almost refreshing. Mike, are you picking up on this too or is it just me?

I think perhaps reading Spectator's notes on Panama sent me off into la-la land. I've never felt so peaceful reading anything on this blog. < sigh > Thank you Spectator. I'm late posting this to the thread but I wish you a most happy and successful journey on your way in Panama. It sounds beautiful. And challenging. And well worth the effort. Your notes and links have re-inspired me to check out Panama for myself. I'll probably check out Costa Rica while I'm in the neighborhood too. So please do post anything else you might feel like sharing about Panama and your plans and dreams. They are inspiring and life-affirming and a nice counter to the usual content on this blog. I enjoyed your notes on South Africa as well. In my youth I traveled extensively in South Africa, New Zealand and Australia and gave more than a little serious consideration to moving to one of these truly incredible locales. Much like you, the beauty of the land and the people in South Africa almost overcame my concern about the political/social instabilities. Little of that in Kiwi-land which I've always thought of as a big person's Disneyland.

And the entries on Los Osos, investing in LO, planning for sewer expenses, reverse mortgages, etc. was a healthy and proactive alternative to the usual sewer blather. Its good to pull our heads up and out and remind ourselves why we're doing this crazy dance.

Oh, I'm tempted to weigh in with some blather of my own. I've not been lulled so much that I don't have ideas (and comments) about regional implications of the LO sewer, the right solution versus the cheap solution (wake up, there is no cheap solution), selling Tri-W (Oh gawd, what are they thinking?), BPP (there are worse options), freedom of bloggers who have something to add to the content should be welcome to post regardless of where they live (we've clearly proven the citizens of Los Osos don't have the answer), In-town/Out-of-town (doesn't matter, this is a clean water issue for the long term future of the valley and tens of thousands more than just those in the PZ), ..... but I'm kinda enjoying the la-la bliss.

Happy Trails .....

Mike Green said...

PG, good to hear from you! Where did you go? I was on Oahu, putting my house up for sale there. The weather was fantastic (which was unusual for me, I must be some kind of rain god).
The reason this seems more peacefull is that us old posters have become good friends, despite our differing opinions,
Now, It's time to go to the meeting.