Feb. 26 (Bloomberg) — The California Public Employees' Retirement System can challenge the legality of San Bernardino, California's bankruptcy, the U.S. Court of Appeals in San Francisco ruled.
The largest U.S. public employees' pension can try in August to persuade the appeals court to overturn a lower court decision finding that the insolvent desert city was eligible for bankruptcy protection.
Calpers and the city have been in court-ordered mediation since last year, when U.S. Bankruptcy Judge Meredith Jury ruled that San Bernardino was entitled to court protection.
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San Bernardino, located about 60 miles (97 kilometers) east of Los Angeles, sought bankruptcy protection from creditors on Aug. 1, 2012, blaming a fiscal emergency brought on by a $46 million budget shortfall. Since filing, the city has fought its employee unions in an effort to cancel their contracts and quit making certain payments to Calpers.
Calpers is among San Bernardino's biggest creditors. The city failed to make some pension payments to the fund on behalf of employees.
The case is In re San Bernardino, 12-bk-28006, U.S. Bankruptcy Court, Central District of California (Riverside). The appeal is Calpers V. San Bernardino, 14-80009, U.S. Court of Appeals for the Ninth Circuit, (San Francisco)
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