BIRMINGHAM, ALA. (CN) – The Bank of New York and two bond insurers sued Jefferson County and its five commissioners for their failure to raise revenue, and raise customers’ sewer rates, to repay the county’s $3.2 billion sewer debt. The staggering debt load has Jefferson County contemplating bankruptcy, which would be the nation’s largest municipal bankruptcy ever.
The Bank of New York Mellon, Financial Guaranty Insurance Co. and Syncora Guarantee sued in Federal Court. The bank says it holds seven “sewer revenue refunding warrants” totaling $4.1 billion.
The plaintiffs, represented by Larry Childs of Birmingham, seek appointment of a receiver to manage the sewer system and assist in finding a solution to the financial crisis.