Chapter 9: Municipality Bankruptcy

Chapter 9 bankruptcy is a legal process that allows municipalities, like cities or towns, to reorganize their debts while continuing to provide essential services to their residents. Unlike businesses, municipalities cannot liquidate their assets to pay creditors. Instead, they propose a plan to adjust their debts, which can include reducing payments or extending repayment periods. This process helps them manage their financial crises without disrupting vital services, and it aims to restore their financial health over time, balancing the interests of creditors and the community's needs.