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Insurers Hold $380M Exposure in Stockton Bankruptcy

A federal bankruptcy judges decision yesterday to approve the Chapter 9 bankruptcy of Stockton, Calif., increased the possibility that two bond insurers may have to make good on the $380 million in exposure they hold with the city.

By Mark E. Ruquet | Updated on April 02, 2013

A federal bankruptcy judge’s decision yesterday to approve the Chapter 9 bankruptcy of Stockton, Calif., increased the possibility that two bond insurers may have to make good on the $380 million in exposure they hold with the city.

Yesterday, U.S. Bankruptcy Court for Eastern District of California Judge Christopher Klein approved the Chapter 9 bankruptcy protection for Stockton filed in June of last year. In his ruling, the judge was critical of both bondholders and the insurers for opposing the city’s petition and not working to resolve debt issues in good faith.

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