Washington State City Files Bankruptcy Over Developer Dispute

A small city in Washington State filed a rare municipal bankruptcy after failing to reach an agreement with a developer over a $26 million court judgment.

Cle Elum, a city of 2,200 about 80 miles east of Seattle, said it couldn’t afford to pay the debt to developer City Heights Holdings LLC, and was insolvent.

While there have been some high profile municipal Chapter 9 filings — like Detroit and Orange County, California — they are relatively unusual and the last local government to go bankrupt was Chester, Pennsylvania in November of 2022.

Last year, an arbitrator ruled in favor ...