City of Prichard, Alabama
Order entered. Pursuant to the Supreme Court of Alabama's answer to the question regarding the City's capacity to file a Chapter 9 petition, the stay is lifted, the decision of the U.S. Bankruptcy Court dismissing the City's Chapter 9 petition is reversed and this action is remanded to the U.S. Bankruptcy Court for further proceedings not inconsistent with the decision of the Supreme Court of Alabama. Signed by Judge Kristi K. DuBose on 5/7/2012. (cmj)
IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF ALABAMA
CITY OF PRICHARD, ALABAMA
Civil Action No. 1:10-00622-KD-M
Previously, the City of Prichard, Alabama filed a bankruptcy petition under
Chapter 9 of Title 11 of the United States Code. The United States Bankruptcy Court for the
Southern District of Alabama dismissed the City’s Chapter 9 petition upon deciding that the City
lacked capacity under Alabama law to file the petition. The City appealed the decision and also
filed a motion to certify to the Supreme Court of Alabama an unresolved question of state law
regarding the capacity of an Alabama municipality to file for Chapter 9 protection based upon
conflicting interpretations of Ala. Code § 11-81-3. The motion was granted and the following
question was certified:
Whether Ala. Code § 11-81-3 (1975) (as amended) requires that an Alabama
municipality have refunding or funding bond indebtedness as a condition of
eligibility to proceed under Chapter 9 of Title 11 of the United States Code ?
The Supreme Court of Alabama consented to answer the certified question. (Doc. 19) In
City of Prichard v. Balzer, - - - So. 3d - - - , 2012 WL 13711413 (Ala. 2012) (slip opinion), the
Court answered in the negative concluding that “[i]t is clear that the legislature intended to
authorize every county, city, town, and municipal authority organized pursuant to Article 9,
Chapter 47 of Title 11, Ala. Code 1975, to file for federal bankruptcy protection. Therefore, §
11–81–3 does not require that an Alabama municipality have indebtedness in the form of
refunding bonds or funding bonds as a condition to eligibility to proceed under Chapter 9 of Title
11 of the United States Code.” Id. *5.
The question regarding the City’s capacity to file a Chapter 9 petition has now been
answered. Accordingly, the stay is lifted, the decision of the United States Bankruptcy Court
dismissing the City’s Chapter 9 petition is reversed, and this action is remanded to the United
States Bankruptcy Court for further proceedings not inconsistent with the decision of the
Supreme Court of Alabama.
DONE and ORDERED this 7th day of May, 2012.
s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
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