07/28/2011 02:21 pm ET Updated Sep 27, 2011

Alabama county delays bankruptcy meeting, mulls offer

By Melinda Dickinson

BIRMINGHAM, Alabama (Reuters) - Alabama's Jefferson County postponed a meeting on Thursday on filing what would be the largest municipal bankruptcy in U.S. history to assess an offer from creditors to settle its crippling sewer debt.

Talks between county creditors and Jefferson County, which is home to Birmingham, Alabama's biggest city, have recently intensified and aim to settle $3.14 billion in sewer-system bonds.

"The commissioners have the terms sheet and are in the process of considering it. It is a very attractive offer," said John Young, a court-appointed manager for the county's debt-ridden water and sewer system.

Jefferson County agreed to extend a 30-day standstill agreement due to run out, according to two county commissioners, who were uncertain of the duration of the extension.

Young told Reuters earlier he had intended to offer the county a seven-day extension so the county commissioners can study the terms proposed by creditors such as JPMorgan Chase & Co.

That creditors' counteroffer, Young said, "is not all about dollars and cents, It's also about litigation issues, market issues. It will take some time to consider."

A spokesman for JPMorgan Chase was not immediately available to comment. Bank officials have repeatedly declined to comment on its Jefferson County bargaining.

The years-old talks have picked up steam in recent weeks even as the federal debt-ceiling crisis worsened. The county earlier this month made an offer to creditors over the debt. One report confirmed as roughly accurate by commissioners said they wanted a $1.3 billion reduction in the total debt as well as other terms.

Young was appointed last year to supervise the finances and operation of the sewer system on behalf of Bank of New York Mellon, the trustees for the creditors.