Bankruptcies, defaults, and other local government financial emergencies Page: 19
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FINANCIAL EMERGENCIES: DEFAULTS
This chapter will examine municipal defaults-cases
of financial emergency which involve failure to pay interest
or principal on municipal securities, but which do
not result in the government filing a bankruptcy petition.
Discovering cases of municipal defaults is much
more difficult than discovering bankruptcy cases because
there is no single source of information. The Advisory
Commission on Intergovernmental Relations
information on defaults is based on a search for cases in
various records and interviews with professionals in the
field. The list-particularly that of defaults on privatepurpose
municipal obligations-is not all inclusive, but
it is the best that can be compiled from these sources.
The discussion in this chapter is divided into three
parts: a section discussing the number and some of the
characteristics of the defaults occurring since the 1973
ACIR report and a comparison of the two periods; a brief
description of the way in which the ACIR list was compiled;
and a look in more detail at some of the more
significant examples of defaults by government entities.
DEFAULT OCCURRENCES, 1972-83
ACIR's search for defaults from 1972 through 1983
found 36 defaults on government-purpose debt and 82
on private-purpose tax-exempt debt (Table 1). Defaults
occur when the government is unable to pay interest or
principal when due. However, five of the governmentpurpose
defaults and three of the private-purpose defaults
are classified as technical because the investor
suffered only a brief interruption of payment or was paid
from a reserve fund; the repayment of the debt itself was
never in serious jeopardy.
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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/m1/29/: accessed January 19, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.