Woolly Wipes Out; Town of Mammoth Lakes follows Stockton into Chapter 9

On July 3, 2012 the Town of Mammoth Lakes filed its anticipated Chapter 9 petition. Unlike other municipal bankruptcies triggered by employee related liabilities, Mammoth’s problem is a $43 million judgment held by Mammoth Lakes Land Acquisition arising from a breached development agreement for land near the Mammoth airport. Debtor’s papers also cite the dry 2011/2012 winter as an additional financial pressure leading to the need for Chapter 9 relief. CALPERS, the largest U.S. pension fund, is the second largest unsecured creditor owed $4.2 million. Debtor filed a chapter 9 disclosure statement and plan concurrently with its petition and seeks to create a trust funded with Contributed Real Estate that will be liquidated and treat the MLLA claim as a general unsecured claim projected to receive 5% to 12% on its Allowed Claim. The petition, disclosure statement and plan are available here: http://db.tt/PJ5muS2F.

Debtor’s counsel is Kenneth Klee and Michael Tuchin of Klee, Tuchin, Bodganoff and Stern, LLP and Zack Clement of Fulbright & Jaworski, LLP. MLLA is represented by Quinn Emanuel Urquhart & Sullivan LLP.  The case was assigned by Ninth Circuit Chief Judge Kozinski to Bankruptcy Judge Thomas C. Holman of the US Bankruptcy Court, Eastern District of California and is pending as case number 12-32463.

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