The City of Stockton and the Official Retirees Committee appointed by the United States Trustee have reached a tentative agreement to settle claims of retirees for lost health benefits. The settlement will become part of the City's Chapter 9 Plan of Adjustment, which is expected to be filed in the late summer or fall. All creditors, including retirees, will have an opportunity to vote on the Plan of Adjustment as part of the Chapter 9 process.
The City has agreed to allocate $5.1 million in the Plan of Adjustment to be divided among those retirees who were eligible for lifetime retiree health benefits at the time the City filed for bankruptcy in June 2012. This lump sum will be the sole payment for claims of lost future retiree medical benefits and will be made when the City's Plan of Adjustment goes into effect. The agreement between the City and Retirees does not propose any impairment of other existing retirement benefits.
Retirees are the City's largest group of unsecured creditors, with approximately 2,400 retirees, 1,100 of whom received retiree medical benefits. The retirees were represented in the City's pre-bankruptcy AB 506 process and during the Bankruptcy Court ordered mediation by the Association of Retired Employees of the City of Stockton (ARECOS). The Court determined that the City was eligible for bankruptcy protection on April 1, 2013, and the 13 retirees representing the retirees were immediately appointed by the Office of the United States Trustee to an Official Retirees Committee.
The Official Retirees Committee will continue to speak for all City of Stockton retirees. The Committee will participate in the remaining phases of the bankruptcy process to insure that the terms of the agreement with the City are part of the Plan of Adjustment.
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This City of Stockton web page last reviewed on --- 5/6/2015