The city of Stockton, California, is eligible for bankruptcy protection, a federal judge has ruled. The ruling rejected creditors' arguments that the city was not truly insolvent when it sought protection and failed to seek pension concessions.
The city fully paid its obligation to California's retired workers pension system, but imposed losses on bondholders and bond insurers, reports Reuters.
Stockton will now be permitted to file for Chapter 9 bankruptcy, making it the largest U.S. city ever to file for municipal bankruptcy. But what is Chapter 9, and how will it affect residents?