A bankruptcy judge has dismissed a lawsuit filed by two disgruntled bond creditors challenging the city of San Bernardino’s decision to make its pension payments in full to CalPERS.
Ruling from Riverside, U.S. Bankruptcy Judge Meredith Jury tossed the claim filed by the two creditors, Ambac Assurance Corp. and a Luxembourg bank named EEPK.
Last fall the city, which filed for bankruptcy protection in 2012, said it would pay its $24 million-a-year CalPERS bill in full. Ambac and EEPK said that arrangement was unfair to other creditors. Although San Bernardino hasn’t filed its complete repayment plan, it’s likely that many creditors would stand to receive only a portion of what they’re owed.
Ambac and EEPK are owed a total of more than $59 million in the San Bernardino bankruptcy. Lawyers for the two creditors couldn’t be reached for comment.
CalPERS welcomed the ruling.
“The judge in this case has ruled appropriately,” said the California Public Employees’ Retirement System in a prepared statement. “Now the city can turn its attention to the more pressing matter of completing its plan of adjustment for exiting bankruptcy.”
