California Bankruptcies May Offer Detroit Lessons

California Bankruptcies Are Being Watched Closely In Detroit
STOCKTON, CA - JUNE 27: A pedestrian walks by the vacant Bank of Stockton on June 27, 2012 in Stockton, California. Members of the Stockton city council voted 6-1 on Tuesday to adopt a spending plan for operating under Chapter 9 bankruptcy protection following failed talks with bondholders and labor unions failed. The move will make Stockton the biggest U.S. city to file for bankruptcy protection from creditors. (Photo by Justin Sullivan/Getty Images)
STOCKTON, CA - JUNE 27: A pedestrian walks by the vacant Bank of Stockton on June 27, 2012 in Stockton, California. Members of the Stockton city council voted 6-1 on Tuesday to adopt a spending plan for operating under Chapter 9 bankruptcy protection following failed talks with bondholders and labor unions failed. The move will make Stockton the biggest U.S. city to file for bankruptcy protection from creditors. (Photo by Justin Sullivan/Getty Images)

Lansing — The California city of Stockton became the nation's largest municipality to enter bankruptcy Monday in a case being closely followed in Detroit to see how retirees and creditors make out.

U.S. Bankruptcy Judge Christopher Klein issued the bankruptcy protection declaration over the objections of the city's bondholders, who challenged Stockton's eligibility for bankruptcy because the city has continued to make its pension payments and not paying other creditors.

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