On Wednesday, CalPERS filed a formal objection to a bankruptcy claim filed by San Bernardino in August, Reuters reports (Reid, Reuters, 10/24).
CalPERS is the largest creditor in a bankruptcy case filed by San Bernardino.
The case could set a precedent if judges relieve the cities of their pension commitments.
Comments on Missed Payments
Last week, CalPERS said that San Bernardino has withheld $5.3 million worth of pension payments since it filed for bankruptcy.
Jim Morris -- the San Bernardino mayor's chief of staff -- said the missed payments are among the many financial obligations the city has delayed to make payroll and maintain essential services. He added that the city hopes to develop a restructured payment plan with CalPERS.
CalPERS has not stopped providing retirement checks to beneficiaries since San Bernardino halted its regular pension payments to CalPERS.
However, CalPERS spokesperson Brad Pacheco said, "If we can't resolve the missed payments with the city, CalPERS will assert its rights and remedies available under the law" (California Healthline, 10/22).
Details of CalPERS' Objection to Bankruptcy Claim
Wednesday was the deadline for creditors to file objections to San Bernardino's bankruptcy claim. CalPERS filed a 20-page objection, as well as 116 pages of exhibits.
In the filing, CalPERS said that San Bernardino's "financial records are in disarray."
It said, "In filing this preliminary objection, the goal of CalPERS is not to start a costly battle over eligibility (for bankruptcy), but rather to defer any dispute about eligibility until the city has produced credible" financial projections.
As of Wednesday evening, no bondholder creditors appeared on the court docket as objecting to the city's bankruptcy claim.
Karol Denniston -- a California attorney and Chapter 9 bankruptcy expert -- said that bondholder creditors might have avoided filing objections so that the San Bernardino case would continue and they could protest CalPERS' status as a creditor (Reuters, 10/24).