FRED NEUFELD (State Bar No
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Case 6:12-bk-28006-MJ Doc 1837 Filed 05/27/16 Entered 05/27/16 21:36:07 Desc Main Document Page 1 of 157 1 PAUL R. GLASSMAN (State Bar No. 76536) FRED NEUFELD (State Bar No. 150759) 2 JAMES O. THOMA (State Bar No. 133329) MARIANNE S. MORTIMER (State Bar No. 296193) 3 KATHLEEN D. DeVANEY (State Bar No. 156444) STRADLING YOCCA CARLSON & RAUTH 4 A Professional Corporation 100 Wilshire Blvd., 4th Floor 5 Santa Monica, CA 90401 Telephone: (424) 214-7000 6 Facsimile: (424) 214-7010 E-mail: [email protected] 7 [email protected] [email protected] 8 [email protected] [email protected] 9 GARY D. SAENZ (State Bar No. 79539) 10 CITY ATTORNEY 300 North “D” STREET, Sixth Floor 11 San Bernardino, CA 92418 Telephone: (909) 384-5355 12 Facsimile: (909) 384-5238 E-mail: [email protected] 13 Attorneys for Debtor 14 City of San Bernardino 15 UNITED STATES BANKRUPTCY COURT 16 CENTRAL DISTRICT OF CALIFORNIA RIVERSIDE DIVISION 17 18 In re Case No. 6:12-bk-28006-MJ 19 CITY OF SAN BERNARDINO, Chapter 9 CALIFORNIA, 20 CITY’S SUBMISSION OF REDLINED Debtor. COMPARISON OF ITS THIRD AMENDED 21 DISCLOSURE STATEMENT OVER THE SECOND AMENDED DISCLOSURE 22 STATEMENT [DOCKET NO. 1774] 23 Hearing Date: June 16, 2016 24 Time: 1:30 p.m. Place: Courtroom 301 25 3420 Twelfth Street Riverside, CA 92501-3819 26 27 28 STRADLING YOCCA CARLSON & RAUTH LAWYERS S ANTA MONICA DOCSSM/3026728v1/200430-0003 Case 6:12-bk-28006-MJ Doc 1837 Filed 05/27/16 Entered 05/27/16 21:36:07 Desc Main Document Page 2 of 157 1 TO THE HONORABLE MEREDITH A. JURY, UNITED STATES BANKRUPTCY JUDGE, AND ALL PARTIES IN INTEREST: 2 3 The City of San Bernardino, California (“City”) hereby submits the redlined comparison, 4 attached hereto as Exhibit 1, of its“Third Amended Disclosure Statement With Respect To The 5 Third Amended Plan For The Adjustment Of Debts Of The City Of San Bernardino, California 6 (May 27, 2016)” over the “Second Amended Disclosure Statement With Respect To The Second 7 Amended Plan For The Adjustment Of Debts Of The City Of San Bernardino, California (March 8 30, 2016)” [Docket No. 1774]. 9 10 Dated: May 27, 2016 STRADLING YOCCA CARLSON & RAUTH A Professional Corporation 11 12 By: /s/ Paul R. Glassman Paul R. Glassman 13 Fred Neufeld Attorneys for City of San Bernardino, 14 Debtor 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STRADLING YOCCA -1- CARLSON & RAUTH LAWYERS S ANTA MONICA SUBMISSION OF REDLINED COMPARISON OF DISCLOSURE STATEMENTS DOCSSM/3026728v1/200430-0003 Case 6:12-bk-28006-MJ Doc 1837 Filed 05/27/16 Entered 05/27/16 21:36:07 Desc Main Document Page 3 of 157 EXHIBIT 1 Case 6:12-bk-28006-MJThis Disclosure Statement Doc 1837 has not been Filed approved 05/27/16 by the Bank ruptcy Entered Court. Therefore,05/27/16 the 21:36:07distribution of the Desc Disclosure Statement and PlanMain at this Document time is not, and should Page not be4 construedof 157 to be, the solicitation of votes on the Plan. 1 PAUL R. GLASSMAN (State Bar No. 76536) 2 FRED NEUFELD (State Bar No. 150759) JAMES O. THOMA (State Bar No. 133329) 3 MARIANNE S. MORTIMER (State Bar No. 296193) KATHLEEN D. DeVANEY (State Bar No. 156444) 4 STRADLING YOCCA CARLSON & RAUTH A Professional Corporation 5 100 Wilshire Blvd., 4th Floor Santa Monica, CA 90401 6 Telephone: (424) 214-7000 Facsimile: (424) 214-7010 7 E-mail: [email protected] [email protected] 8 [email protected] [email protected] 9 [email protected] 10 GARY D. SAENZ (State Bar No. 79539) CITY ATTORNEY 11 300 North “D” STREET, Sixth Floor San Bernardino, CA 92418 12 Telephone: (909) 384-5355 Facsimile: (909) 384-5238 13 E-mail: [email protected] 14 Attorneys for Debtor City of San Bernardino 15 UNITED STATES BANKRUPTCY COURT 16 CENTRAL DISTRICT OF CALIFORNIA 17 RIVERSIDE DIVISION 18 In re Case No. 6:12-bk-28006-MJ 19 CITY OF SAN BERNARDINO, Chapter 9 CALIFORNIA, 20 Debtor. SECONDTHIRD AMENDED DISCLOSURE 21 STATEMENT WITH RESPECT TO THE SECONDTHIRD AMENDED PLAN FOR THE 22 ADJUSTMENT OF DEBTS OF THE CITY OF SAN 23 BERNARDINO, CALIFORNIA (MARCH 30,MAY 27, 2016) 24 25 Hearing Date: April 27,June 16, 2016 Time: 1:30 p.m. 26 Place: Courtroom 301 3420 Twelfth Street 27 Riverside, CA 92501-3819 28 SECONDTHIRD AMENDED DISCLOSURE STATEMENT FOR PLAN FOR THE ADJUSTMENT OF DEBTS Case 6:12-bk-28006-MJ Doc 1837 Filed 05/27/16 Entered 05/27/16 21:36:07 Desc Main Document Page 5 of 157 TABLE OF CONTENTS Page 1 2 I. INTRODUCTION 1 A. Purpose of the Disclosure Statement 4 3 B. Summary of Treatment of Claims and Other Information. 5 C. Summary of Entities Entitled to Vote on the Plan and of 4 Certain Requirements Necessary for Confirmation of the Plan 9 D. Voting Procedures, Balloting Deadline, Confirmation Hearing, 5 and Other Important Dates, Deadlines, and Procedures 10 1. Voting Procedures and Deadlines 10 6 2. Plan Confirmation Hearing Date and Deadlines for Objections to Confirmation of the Plan 1011 7 E. Important Notices and Cautionary Statements 12 F. Persons to Contact for Further Information 13 8 II. THE CITY’S FISCAL CHALLENGES LEADING TO ITS BANKRUPTCY FILING 13 9 A. The City’s Financial Problems Prior To Theto the Petition Date 1314 10 B. The City’s Attempts to Avoid Insolvency 15 C. The City Learns It Is Deeply Insolvent 16 11 D. The City’s Declaration of Fiscal Emergency and Filing of the Bankruptcy Case 18 12 E. Adoption of City’s Fiscal Emergency Plan 19 13 III. ADMINISTRATION OF THE BANKRUPTCY CASE 20 A. Implementation of the Pendency Plan 20 14 B. Eligibility Litigation 21 C. Mediations Conducted by Judge Gregg Zive 21 15 D. The City’s Pension Plan and the CalPERS Settlement 22 E. Settlement With Official Retiree Committee on Retiree Health Benefits 24 16 F. Litigation, and then Settlement, with the POB Creditors 27 G. Litigation, and then Settlements, with the City’s Labor Unions 28 17 H. Motions for Relief from Stay to Pursue or Commence Litigation 3132 I. Status of the City’s Audits 32 18 J. Development of the City’s Plan and Implementation of Measures to Increase Operational Efficiencies and Enhance Revenues 32 19 K. Filing of the City’s Plan and Disclosure Statement 34 20 IV. THE CITY’S LIABILITIES AND ASSETS 34 21 A. Liabilities and Claims 3435 1. Liabilities Listed by the City in Its List of Creditors 35 22 2. Proofs of Claim 35 3. General Unsecured Claims 36 23 4. Priority Unsecured Claims 3637 5. Secured Claims 37 24 6. Restricted Revenue Bond and Note Payable Claims 39 7. Other Bond Claims 41 25 8. Consenting Union Claims 46 9. Litigation Claims 46 26 10. Employee Wage and Benefit Claims 5052 11. Key Contractual Obligations 5053 27 12. Newmark Groundwater Contamination Consent Decree 5254 13. Environmental/Remediation Obligations 5255 28 14. Lease Obligations for Real Property 5355 SECONDTHIRD AMENDED DISCLOSURE STATEMENT FOR PLAN FOR THE ADJUSTMENT OF DEBTS i Case 6:12-bk-28006-MJ Doc 1837 Filed 05/27/16 Entered 05/27/16 21:36:07 Desc Main Document Page 6 of 157 TABLE OF CONTENTS Page 1 15. The PARS Claims 5356 2 16. Workers Compensation Liabilities. 55 58 17. Capital Maintenance Obligations 5559 3 18. Cash Balances of City Funds and Description of Restricted Funds 5761 19. Reservation of Rights on Allowance or Disallowance of Claims 5862 4 B. City Assets 5962 1. City Owned Sports Facilities 5962 5 2. Other Real and Personal Property Assets 6164 3. The Former RDA and the Successor Agency Assets 6165 6 V. SUMMARY OF THE PLAN OF ADJUSTMENT 6468 7 A. Classification and Treatment of Claims 6468 1. Unclassified Claims 6468 8 2. Classified Claims 6569 B. Treatment of Executory Contracts and Unexpired Leases 7679 9 1. Executory Contracts Generally 7679 2. Assumption and Assignment of Executory Contracts 7680 10 3. Rejection of Executory Contracts 7781 4. Deadline for the Assertion of Rejection Damage Claims; 11 Treatment of Rejection Damage Claims 7881 5. Amendments to Assumption, Assumption and Assignment or 12 Rejection of Contracts and Leases 78 C. Means for Execution and Implementation of the Plan 7882 13 1. Alternative Methods of Delivering Municipal Services 7982 2. Police Resources Plan 8690 14 3. Necessary Reinvestment in City Infrastructure and Services 9194 4. City Charter Reform 9598 15 5. Revenue Enhancement Measures 9699 6. City’s Continued Operations 99102 16 7. City’s Retention of Rights of Action 100103 D. Provisions Regarding Distributions Under the Plan 100103 17 1. Distribution Agent 100103 2. Delivery of Distributions 100103 18 3. Distributions of Cash 101104 4. Timeliness of Payments 101104 19 5. Compliance with Tax, Withholding, and Reporting Requirements 101104 6. Time Bar to Cash Payments 101104 20 7. No De Minimis Distributions 102105 8. Distributions of Unclaimed Property 102105 21 9. No Distributions on Account of Disputed Claims 102105 10. Certain Claims to be Expunged 103106 22 11. No Post-petition Accrual 103106 E. Disputed Claims 103106 23 1. Claims Objection; ADR Procedures; Prosecution of Objections 103106 2. Payments and Distributions with Respect to Disputed Claims 103106 24 F. Continuing Jurisdiction of the Bankruptcy Court 104107 VI.25 CONFIRMATION AND EFFECTIVENESS OF THE PLAN 104107 26 A. Voting on the Plan 104107 1. Who May Vote to Accept or Reject the Plan? 104107 27 2.