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ANALYSIS: The Long and Winding Road to Chapter 9 Bankruptcy

Feb. 26, 2021, 9:24 AM

Municipal bond defaults are on the rise. But that does not necessarily mean that a surge in municipal (Chapter 9) bankruptcies is right around the corner. A municipality must travel a long and winding road before filing a Chapter 9 case—if it can file one at all. Still, as defaults become more common and more cities and localities struggle financially, practitioners may want to learn more about this complicated and less-traveled journey.

In the past year, municipal finances have been strained by the Covid-19 pandemic and recession. Job loss, business closures, event cancellations, decline in leisure and business travel, and ...