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San Bernardino Headed to Bankruptcy Mediation

Saturday, December, 24, 2016

San Bernardino city officials were recently ordered into mediation with one of its creditors by a US bankruptcy judge. The creditor headed to mediation with the city is one of the few, still posing a challenge to the bankruptcy plan that’s moving forward for the city.

The judge in the bankruptcy court stated she had been prepared to make a ruling on the issues preventing the city from confirming its bankruptcy, which is the last step before San Bernardino will exist bankruptcy court. The city began its bankruptcy in August 2012. Now, the judge plans to rule in early December on the issues raised by the Big Independent Cities Excess Pool, as well as other issues raised by city creditors.

The judge believes the mediation is not expected to prolong the case and could actually save time by preventing an appeal. She has requested the city come prepared to mediation to “put a bow on the case” in December.

The mediation is scheduled to begin in late November in Reno, Nevada and be overseen by retired US Bankruptcy Court Judge Gregg Zive. Zive had previously been involved in the bankruptcy case for San Bernardino and is credited with broker major settlements in the country’s longest running bankruptcy. Those familiar with the case are expecting similar results to Zive’s previous involvement.

The judge had previously rejected a proposal from a civil rights attorney that would modify the bankruptcy plan because of the recent legalization of marijuana. He believed it would create a potential “financial bonanza” for the city. The judge stated the amount of money raised from legal marijuana sales would not be known for years and she was unwilling to delay the case that long.