Bankruptcies, defaults, and other local government financial emergencies Page: 7
This book is part of the collection entitled: Advisory Commission on Intergovernmental Relations and was provided to Digital Library by the UNT Libraries Government Documents Department.
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This chapter opens with a brief overview of the general
provisions of federal bankruptcy law pertaining to
municipal governments.1 The balance of the chapter examines
the incidence of municipal bankruptcies occurring
between 1973 and 1983. The individual
circumstances of the bankruptcies of general-purpose
governments is discussed first, followed by the description
of the bankruptcies involving a school district, utility
districts, and other governmental entities.
GENERAL MUNICIPAL BANKRUPTCY
Article VI, Section 8 of the U.S. Constitution grants
Congress the general power to "establish uniform laws
on the subject of bankruptcies throughout the United
States." This power pertaining to bankruptcy is embodied
in Title 11 of the U.S. Code. All requirements
and procedures for filing municipal bankruptcy specifically
are addressed in Chapter 9 of the U.S. Bankruptcy
In a strict sense, the term "bankruptcy" is a misnomer
when it is used in conjunction with municipal governments.
Because municipal governments provide services
that are essential to the general welfare of
communities, it is generally neither desirable nor feasible
for governments to simply cease operations and liquidate
their assets like private sector bankruptcies.2
Instead, municipal bankruptcy should be more appropriately
viewed as a means by which the financial obligations
of a municipality are restructured to allow a
realistic and orderly repayment of debts incurred. A major
consideration in this reorganization process is the
continuation of essential governmental services with
the minimal amount of loss or inconvenience to individual
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United States. Advisory Commission on Intergovernmental Relations. Bankruptcies, defaults, and other local government financial emergencies, book, March 1985; Washington, D.C.. (digital.library.unt.edu/ark:/67531/metadc1317/m1/17/: accessed January 15, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.