In all the years I've taught bankruptcy, I've never more than mentioned Chapter 9 of the Bankruptcy Code. Chapter 9 deals with municipalities in financial distress (and Chapter 1 of the Code defines "municipalities" more broadly than one might expect).
Notwithstanding my limited knowledge of this narrow field of the law, the folks at the American Bankruptcy Institute asked me to moderate a call-in teleconference about the current state of Chapter 9. I was thankful that the panel of experts included the judge handling the bankruptcy of Stockton, California, a lawyer deeply involved with the Jefferson County, Alabama Chapter 9, Professor Juliet Moringiello from Widener who's written about the abortive bankruptcy of Harrisburg, Pennsylvania, as well as a representative of Wells Fargo who crunches the numbers on the creditworthiness of municipal debt.
I'm attaching a link to the ABI Newsroom page here from which you can connect to a recording of the teleconference. Not surprisingly, I think it would be most interesting to folks who teach bankruptcy law but there are some interesting Constitutional and local government law questions lurking in the background.
While the final number for bankruptcies in 2012 isn’t yet in, there were 17 through the first three quarters of the year. That's only one fewer than the greatest number since 1980 (18 in 1991) so I wouldn't be surprised to find out that 2012 will have set a new record. The panel didn't have time to address their predictions for 2013 but I suspect it will be about the same. The continuing low costs of borrowing generally, combined with a continuing rise in real estate values (and taxes), should keep most municipalities solvent, at least for now. However, the continued inadequate funding of retiree pensions and health benefits augurs ill for the longer-term future.
With all this in mind, perhaps I'll give Chapter 9 a full day this fall.