Mammoth Lakes, California, voted to file for bankruptcy to protect itself from a $43 million court judgment, the resort town said.
The city council voted to seek bankruptcy after its largest creditor, Mammoth Lakes Land Acquisition, won a court order requiring the city to pay the judgment by June 30, according to a statement on the city’s website. Under Chapter 9 of the U.S. Bankruptcy Code, municipalities can halt court actions against it while they seek to reorganize their finances. The tactic is common among corporations that file so-called Chapter 11 bankruptcies.
The decision comes five days after the northern California city of Stockton filed for bankruptcy with plans to try to impose cuts on bondholders and employees.
Vallejo, California, filed bankruptcy in 2008 and used court protection to cut benefits to retirees, renegotiate labor contracts and reduce the interest it was paying lenders. The city exited bankruptcy last year.
| 
