State Representative Ron Sandack (R-Downers Grove) filed legislation this week that would make Illinois the 25th state that allows municipalities to seek bankruptcy protections under Chapter 9 of the U.S. Bankruptcy Code.
Chapter 9 allows for bankruptcy protection, but includes a provision that requires a municipality to gain state authorization as part of the filing. Currently, Illinois statutes do not allow for such authorization for municipal governments.
“House Bill 298 would allow desolate and debt-ridden municipalities in Illinois to seek bankruptcy protections through the federal bankruptcy law,” said Sandack. “As more and more municipalities are looking for relief and ways to deal with rising pension liabilities and other costs, this is a tool that can help them stabilize and reorganize financial affairs in ways that benefit taxpayers.” Read more.