Chapter 9, Title 11 of the United States Code is a chapter of the United States Bankruptcy Code, available exclusively to municipalities and assists them in the restructuring of debts. Most famously, Chapter 9 was used by Orange County, California in 1994 to adjust its debts.

While in many ways similar to other forms of bankruptcy reorganization (Chapters 11, 12, and 13), Chapter 9 has a number of unique characteristics. Because municipalities are entities of State governments, the power of Congress to adjust their debts through bankruptcy is limited considerably by the 10th Amendment.

Notable Municipal Chapter 9 Bankruptcies:

• Orange County, California, 1994, due to investment losses.
• Desert Hot Springs, California, 2001, due to losing a lawsuit. ^[1]
• Millport, Alabama, 2005, due to loss of sales tax revenues after factory closing. ^[2]
• Moffett, Oklahoma, 2007, due to loss of ability to issue traffic tickets.^[3]
• Gould, Arkansas, 2008 ^[4], due to spending money withheld to pay employee income taxes.
• Vallejo, California, 2008, due to inablity to pay pension obligations.^[5]

Hospital District Chapter 9 Bankruptcies:

(A Hospital District is a governmental entity with taxing authority that owns and operates medical facilities.)

• The Valley Health Systems district, California^[6]
• West Contra Costa Healthcare District, California ^[7]

Other Entities that Declared Chapter 9 Bankruptcy

• The West Jefferson Amusement and Public Park Authority owner of VisionLand Park now known as Alabama Adventure Theme Park, 2002, Due to business that could not support it's debt.^[8]

• (some references are on the municipality's Wikipedia page)

External Links:

ADJUSTMENT OF DEBTS OF A MUNICIPALITY

References

1. ^ The City of Desert Hot Springs filed Chapter 9 bankruptcy papers in late December, making it the first California city in at least 25 years to seek bankruptcy protection
2. ^ Millport making a comeback
3. ^ Oklahoma: Speed Trap Town Goes Bankrupt
4. ^ Bankruptcy filed, tiny town hopes to rise again
5. ^ Vallejo's path to bankruptcy - Vallejo Times Herald
6. ^ Hospitals file for Chapter 9 bankruptcy : North County Times - Californian
7. ^ Doctors Medical Center files for Chapter 9 bankruptcy protection - San Francisco Business Times:
8. ^ VisionLand debt prompts Chapter 9 filing

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