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Perspective

Aug. 10, 2012

Stockton health benefits not protected by the Contracts Clause

The bankruptcy court presiding the case explained that the Bankruptcy Clause of the U.S. Constitution eclipses the Contracts Clause. By David Kupetz of Sulmeyer Kupetz PC


The city of Stockton unilaterally reduced the payment of retiree health benefits upon the commencement of Stockton's municipal debt adjustment case under Chapter 9 of the Bankruptcy Code. It is routine to suspend payment of various obligations during a bankruptcy reorganization case.


Stockton, Mammoth Lakes and San Bernardino have commenced Chapter 9 cases in recent weeks. Debt adjustment cases for municipal entities, however, have historically been far from...

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