Vallejo, California bankruptcy

In 2008, Vallejo, California, filed for bankruptcy under Chapter 9, which allows municipalities to reorganize their debts. This financial crisis was primarily due to rising pension costs, declining property values, and budget deficits. Vallejo struggled with high unemployment and declining revenues, leading to its decision to seek bankruptcy protection to manage debts and restructure finances. The filing allowed the city to pause payments to creditors, renegotiate contracts, and aim for fiscal stability while continuing to provide essential services to its residents. Vallejo emerged from bankruptcy in 2011, implementing financial reforms to prevent future crises.