The bankruptcy filing by Jefferson County that includes Birmingham is the largest ever municipal bankruptcy. According to sources, county commissioners decided to declare bankruptcy because creditors balked at economic concessions outlined in a September deal.
The county is facing $4.23 billion in debt, according to the Birmingham News. The largest creditor, JPMorgan Chase & Co., owns about $1 billion of the county's $3.14 billion in sewer construction bonds. Reuters says the sewer bonds had soured in the mid-2000s amid corruption that led to bribery and fraud charges.
The county, listed assets and debt of more than $1 billion in Chapter 9 bankruptcy petition filed on November 9, 2011 in U.S. Bankruptcy Court in Birmingham.
The threat of bankruptcy has loomed over the county for more than three years and inspired provisions in the federal Dodd-Frank law seeking to protect localities from complex financial trades involving derivatives.
