76.16A - DEBTOR STATUS PERMITTED -- CIRCUMSTANCES.
76.16A DEBTOR STATUS PERMITTED -- CIRCUMSTANCES.
A city, county, or other political subdivision may become a debtor
under chapter nine of the federal bankruptcy code, 11 U.S.C. § 901 et
seq., if it is rendered insolvent, as defined in 11 U.S.C. §
101(32)(c), as a result of a debt involuntarily incurred. As used
herein, "debt" means an obligation to pay money, other than
pursuant to a valid and binding collective bargaining agreement or
previously authorized bond issue, as to which the governing body of
the city, county, or other political subdivision has made a specific
finding set forth in a duly adopted resolution of each of the
following:
1. That all or a portion of such obligation will not be paid from
available insurance proceeds and must be paid from an increase in
general tax levy.
2. That such increase in the general tax levy will result in a
severe, adverse impact on the ability of the city, county, or
political subdivision to exercise the powers granted to it under
applicable law, including without limitation providing necessary
services and promoting economic development.
3. That as a result of such obligation, the city, county, or
other political subdivision is unable to pay its debts as they become
due.
4. That the debt is not an obligation to pay money to a city,
county, entity organized pursuant to chapter 28E, or other political
subdivision. Section History: Recent Form
92 Acts, ch 1185, § 1; 2005 Acts, ch 3, §21