The Basics of Chapter 9 Bankruptcy
Chapter 9 bankruptcy is a type of bankruptcy that allows municipalities, which are local government entities like cities and towns, to reorganize their debts. It's similar to Chapter 11 bankruptcy, but there are some key differences. For one, Chapter 9 bankruptcy cases are overseen by a federal judge, whereas Chapter 11 cases are overseen by a bankruptcy court. Additionally, only municipalities can file for Chapter 9 bankruptcy.
So what does filing for Chapter 9 bankruptcy mean for a municipality? Essentially, it means that the municipality can work with its creditors to come up with a repayment plan for its debts. This repayment plan may involve the municipality selling off some of its assets, but the goal is to allow the municipality to stay in operation while still paying back its creditors.
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