BIRMINGHAM, Ala. – Jefferson County this week became the largest municipal entity ever to file for bankruptcy in the United States, owing more than $4 billion after a disastrous sewer system upgrade funded by arcane interest-rate swaps that blew up in 2007, saddling it with soaring interest rates it could not afford.
Jefferson County Commission President Larry Langford was convicted on corruption charges and JPMorgan Chase paid a multimillion-dollar SEC settlement for its pay-to-play deals.
A bankruptcy hearing was called for this morning (Friday) before Chief Bankruptcy Judge Thomas Bennett.
The county filed under Chapter 9, which is reserved for government entities. It has laid off more than 550 workers and cut programs.
Until Wednesday, when Jefferson County filed, Orange County, Calif. was the biggest bankrupt government entity ever, declaring $1.2 billion in debt when it filed in 1994.