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Bankruptcy Information

San Bernardino Bankruptcy Information for Retirees Information Re: Official Committee of Retired Employees of the City of San Bernardino

In re City of San Bernardino
United States Bankruptcy Court, Central District of California, Riverside Division Case No. 6:12-28006-MJ

DISCLAIMER: THE INFORMATION CONTAINED ON THIS WEBPAGE IS FOR INFORMATIONAL PURPOSES ONLY. THIS INFORMATION IS NOT INTENDED TO CREATE, AND ITS RECEIPT DOES NOT CONSTITUTE, AN ATTORNEY-CLIENT RELATIONSHIP. ADDITIONALLY, THE INFORMATION CONTAINED ON THIS SITE DOES NOT CONSTITUTE LEGAL ADVICE OR A LEGAL OPINION, AND SHOULD NOT BE RELIED UPON AS SUCH.

Steve Katzman and Anne Uyeda of BMK, counsel for the Official Committee of Retired Employees (the “Committee”), will be holding an informational meeting to answer questions from retirees who hold claims against the City of San Bernardino at the following time and location:

Thursday, August 18, 2016
1:30 p.m. – 4 p.m.
Bing Wong Auditorium Norman F. Feldheym Central Library
555 West 6th Street
San Bernardino, CA 92410

The meeting will cover the history of the City’s bankruptcy case, the role and efforts of the Retiree Committee in the case, the City’s treatment of retiree claims, the Third Amended Plan for the Adjustment of Debts (the “Plan”), and the balloting/voting process.

On July 29, 2016, the City of San Bernardino mailed a solicitation package to its creditors with copies of the Plan, the related Disclosure Statement, and a letter from the Retiree Committee setting forth its support – and the support of the City of San Bernardino Retired Public Employees Association – in favor of the Plan. Copies of the Plan, the Disclosure Statement, and the Committee’s letter can be found here, here, and here.

The Committee encourages retirees to vote in favor of the Plan before the ballot deadline (September 2, 2016).

 

Background Information

On August 1, 2012, the City of San Bernardino (the “City”) filed a voluntary petition in the United States Bankruptcy Court for the Central District of California, Riverside Division (the “Court”), seeking relief under the provisions of Chapter 9 of the United States Bankruptcy Code. On September 17, 2013, the Court entered its Order for Relief permitting the City’s bankruptcy to proceed.

On October 11, 2013, the Office of the United States Trustee (“UST”) appointed the Committee to represent the interests of the City’s retired employees (the “Retirees”). That same day, the Committee selected Bienert, Miller & Katzman, PLC (“BMK”) as its legal counsel.

Since its appointment, the Committee has been actively participating in the City’s bankruptcy, including attending Court-ordered mediation. The Committee has participated at numerous mediation sessions with the City and other creditors, beginning in November 2013 and continuing to the present. The Committee and a specially selected subcommittee have also met with the City several times regarding Retiree healthcare. Additionally, the Committee has attended all hearings before the Court since its appointment. The Committee will continue to advance the interests of the Retirees throughout the City’s bankruptcy.


Recent Developments

The City reached an agreement with the California Public Employees Retirement System (“CalPERS”), the City’s largest creditor, through the confidential mediation process discussed above. A copy of the City’s agreement with CalPERS can be found here.

The Committee, through its subcommittee, has met with the City on several occasions to discuss Retiree healthcare. Through letters to Retirees dated October 23, 2014, the City has announced certain changes it will be making to Retiree health benefits beginning January 1, 2015. Copies of those letters can be found here, here and here. As noted in these letters, the Committee’s agreement to the City’s changes to Retiree healthcare is expressly conditioned on the City continuing to fund and not impair the Retiree’s pension benefits provided by CalPERS. A copy of the Committee’s settlement agreement with the City regarding retiree health care benefits can be found here.

The Committee encourages the Retirees to carefully evaluate their options with respect to healthcare to ensure they obtain the best plan for them in terms of coverage and cost. In addition to comparing plans offered by the City, Retirees should review and compare alternative plans, such as those offered by the California exchanges. These plans can be viewed at www.coveredca.com.


Bankruptcy Information and Materials

The City has established a website containing information related to its bankruptcy case, including links to documents filed on the Court’s docket. This website can be accessed by clicking here.

For a brief summary and overview of Chapter 9 municipal bankruptcy, click here.


Frequently Asked Questions (FAQs)

Q: What is the Committee?
A: The Committee was appointed by the UST, and is presently comprised of seven (7) Retirees with various backgrounds, including the former Chief of Police, Director of Finance, Parks and Recreation and Civil Service employee, Fire Battalion Chief, Superintendent of Recreation, Senior Deputy City Attorney, and a former Police Captain. The Committee acts as a fiduciary for the Retirees and, among other things, (i) consults with the City and other constituents (e.g., CalPERS and bargaining units) on the administration of the case; (ii) provides access to information to Retirees; and (iii) participates in formulating and negotiating the terms of the City’s plan of adjustment.

Q: What is the role of the Committee’s legal counsel (i.e., BMK)?
A: BMK, and any other professional hired by the Committee, represents the Committee and assists the Committee with the performance of its duties. BMK is not the attorney for and does not represent any individual Retiree. To the extent any Retiree has a specific legal question or issue, that Retiree should consult with their own attorney.

Q: Who is responsible for the Committee’s expenses?
A: The Committee’s expenses and legal fees are paid by the City pursuant to an agreement reached after the appointment of the Committee. Retirees are not financially responsible for the Committee’s expenses or legal fees.

Q: Will the Retirees’ medical benefits be affected by the City’s bankruptcy?
A: The City has already implemented reduced medical benefits for some Retirees in the form of a lower monthly healthcare subsidy. As noted above, the City also implemented additional changes effective January 1, 2015. Retirees are encouraged to carefully evaluate their options with respect to coverage that will continue to be offered by the City, as well as alternative coverage, such as that provided by Covered California.

Q: Will the Retirees’ pensions be affected by the City’s bankruptcy?
A: Under the Third Amended Plan for the Adjustment of Debts (“Plan”) filed by the City on July 29, 2016, the Retiree’s CalPERS pension benefits will not be altered in any way.

Q: What is a “plan for adjustment of debts” and what is the process for it to be confirmed?
A: Under applicable bankruptcy law, the City is required to file what is called a “plan for adjustment of debts.” Only the City may file this plan. The plan will set forth the way in which the City proposes to treat its various creditors, including the Retirees. The creditors will then vote on whether or not they accept the plan. To the extent any class of creditor is impaired (i.e., the creditor’s legal, equitable, or contractual rights are altered), then at least one (1) impaired class must accept the plan. If that occurs, then the plan may be confirmed so long as it is fair and equitable, and does not discriminate unfairly. Only a plan that is in the best interests of creditors may be confirmed. Creditors will have the opportunity to object to any plan. The link to a copy of the City’s Plan, which was filed on July 29, 2016, is found at the top of this webpage.

Q: How can Retirees contact the Committee to ask questions or obtain additional information?
A: If you have questions, you may submit them to the Committee by sending an email to SBRetireesInfo@bmkattorneys.com or by calling Anne Uyeda at 949-369-3700. The Committee will attempt to respond and provide additional information as it becomes available.