A major creditor of bankrupt San Bernardino told Reuters Thursday that it would oppose a bankruptcy plan that mandates the city keep paying CalPERS in full.
San Bernardino’s current plan doesn’t disrupt payments to CalPERS and keeps pensions intact.
The creditor has not been identified.
A major capital markets creditor of bankrupt San Bernardino, California, will oppose any exit plan that is more favorable to Calpers, California’s public pension fund, a source familiar with the creditor’s strategy said on Thursday.
The creditor intends to pursue a new approach when hearings resume next year, in light of a deal the city reached with Calpers in November that will see the pension fund paid in full under a bankruptcy plan. The city has been ordered to produce a plan by May.
“We will strongly resist a plan that treats its pension claims substantially better than our claim,” the source involved in the creditor’s San Bernardino strategy said, who spoke on the condition of anonymity because negotiations with San Bernardino are subject to a judicial gag order.
The move is significant because all the capital market creditors have so far supported the bankruptcy and it signals a change in course, speaking to the wider fight between Wall Street and pension funds over how they are treated in municipal bankruptcies.
San Bernardino declared bankruptcy in July of 2012.