Bankruptcy laws favor investors over retired city employees

August 14, 2011

According to a recent NY Times article, city governments faced with insufficient or declining tax revenues are seeking bankruptcy protection. The current bankruptcy laws provide a prioritization of creditors to ensures payments to bond investors over payment to pensions to retired civil workers such as police and fire workers. Sadly, it is reported that many cities failed to pay into the social security retirement system as a cost savings measure based upon their promise to the civil servants of the pension system.

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