Category: California

Mediation News in California.

July 21, 2012

Stockton Mediation: Before Bankruptcy

The city of Stockton pursued mediation sessions with union leaders and its creditors for more than 200 hours.

Author: Stephen Alexander – With more than 210 hours of mediation under its belt, the city of Stockton finally made the decision to head to bankruptcy last month. The talks with its unions produced some fruit as the city negotiated six agreements with nine of its unions.

The time spent in sessions with union leaders last nine full days with two additional five hour meetings. The new law from the California legislature mandates mediation before filing bankruptcy.

On Friday, the city of Stockton released several hundred pages of documents pertaining to the AB506 mediation process that happened before the city filed for Chapter 9 bankruptcy protection on June 28, 2012. The documents showed that the process consisted of forty-seven meetings and four conference calls.

The documents showed that Stockton had most of its discussions with the labor groups and retirees. The city failed to reached tentative agreements with two of its fire unions and the Stockton Police Officers Association. However, those mediation sessions had numerous offers and counteroffers.

The six unions that reached agreements during the process will have their contracts ratified by the City Council on Tuesday, the 24th of July

Though the city has not reached tentative agreements with two of its fire unions or with the Stockton Police Officers Association, in all of those cases numerous offers and counteroffers were exchanged, the documents reveal. The tentative agreements that were reached with six of the unions are expected to be ratified by the City Council at its meeting Tuesday night.

The Association of Retired Employees of the City of Stockton also negotiated in good faith, as the group made two counteroffers to the city’s proposal. However, no agreement was finalized.

Some of the creditors of Stockton, such as Assured Guaranty, National Public Finance Guarantee Corp., Wells Fargo and the Howard Jarvis Taxpayers Association, declined to make any counter-proposals to the city’s offers.

However, two other creditors, Franklin Advisers and plaintiffs from a lawsuit against Stockton, participated in good faith and made counter-proposals during the mediation.

July 19, 2012

Mediation Bypassed for San Bernardino

With mediation bypassed, San Bernardino’s next stop is Chapter 9 bankruptcy in 30 days.

Author: Stephen Alexander – Declaring a fiscal emergency, the City Council of San Bernardino moves to bypass a 60-day mediation period with its creditors in order to file a planned bankruptcy. The mediation is mandated by California law.

The council followed the emergency declaration with a 5-2 vote to seek Chapter 9 bankruptcy protection. According to a statement by interim city manager Andrea Travis Miller, “the City of San Bernardino will move forward with its plan to file Chapter 9 bankruptcy protection in approximately 30 days.” The city will continue to negotiate with its creditors prior to the Chapter 9 filing, according to the city manager.

Recently, the interim city manager and Finance Director Jason Simpson released a report saying the city was soon to be insolvent. The city’s expenses were projected exceed revenues by $45 million.

In 2001, the general fund of San Bernardino was as high as $19 million. With downtown Los Angeles 60 miles to the west, the city of 211,000 has lost $10 to $16 million in annual revenue in the last few years.

Contracts with city workers that reduced salaries ended July 1, 2012. The increase in salaries and benefits is expected to cost around $10 million. Moreover, costs will rise even higher as merit increases resume. According to the report, pay concessions and a reduced work force of 20% over the past four years, San Bernardino will not have enough cash on hand to meet its obligations.

When it files bankruptcy, San Bernardino will become the third California city to file bankruptcy in this year. In June, the city of Stockton filed for Chapter 9 protection after three months of mediation with its creditors. Stockton’s budget was $26 million short after slashing services and employee compensation over a three year period. With the floodgates open, more cities in California are expected to file for Chapter 9 protection.

July 14, 2012

Mediator Picked in Stockton Bankruptcy

Judge appoints a mediator for an August mediation in the Stockton Bankruptcy Case

Author: Stephen Alexander – In the now largest municipal bankruptcy case in the United States of America, the judge in charge of Stockton’s bankruptcy has appointed another judge for the position of mediator.

U.S. Bankruptcy Judge Christopher Klein plans for the city of Stockton and its creditors to meet with U.S. Bankruptcy Judge Elizabeth L. Perris on August 30th. At the August conference the structure of the mediation will be decided.

In court last week, Judge Klein said that a successful bankruptcy requires the California city to propose “a consensual plan of adjustment.” This plan will require the city and its creditors to agree. Agreement is something that months of mediation has failed to create.

On June 28th, Stockton filed for bankruptcy, after bondholders, labor unions and the city failed to reach a consensus. On July 10th, a group of retired employees filed a lawsuit in order to prevent the city from ending their health care benefits. Prior to entering bankruptcy, Stockton said it would end retiree benefits to balance its budget.

July 4, 2012

Save Mart Enters Mediation With UFCW

Author: Stephen Alexander -The United Food and Commercial Workers (UFCW) and Save Mart are entering mediation in order to resolve differences before a deadline next Tuesday.

The president of UFCW’s Local 8 in Roseville, Jacques Loveall, posted a message on the union’s website stating that a mediator was agreed to with Save Mart. Moreover, the message said that a deadline of July 10th would attempt to reconcile an audit of Save Mart’s need for financial relief, the structure of labor costs based on the audit, and authorization of union-management bargaining committees to establish agreements to allow the union to “design an overall health and welfare plan.”

Save Mart said that a “strike is not beneficial for our company or our associates, and an agreement must be reached quickly,” according to a statement made on Tuesday. Save Mart hopes that an agreement will be made that provides job security for their workers and more hours and allows Save Mart to “stay competitive in the retail food marketplace.”

Save Mart is owned by Save Mart Supermarkets, which own and operates more than 240 stores under the names of Save Mart, S-Mart Foods, Lucky,and FoodMaxx in Northern California and Southern Nevada.

Recently, workers at Save Mart have been discussing a strike. Workers at UFCW Local 5 in San Jose took a vote to authorize a strike with an approval of 94% of its members. That vote means that union leaders have the power to call a work stoppage.

UFCW is currently engaged with negotiations with Raley’s and Safeway.

June 27, 2012

Stockton Bankruptcy Soon: Mediation Over

Author: Stephen Alexander – By Friday June 27th 2012, Stockton, California will become the largest city in the United States to declare bankruptcy. Their last hope in mediation has failed.

Bob Deis, the city manager for Stockton said that the city was not able to negotiate a deal with creditors to restructure hundreds of millions of dollars of debt in mediation. The state-mandated talks was designed to help municipalities avoid bankruptcy.

Mr. Deis also said that “Chapter 9 bankruptcy protection is the only choice left.” He did say that the city is continuing to negotiate with creditors and that any agreements “would be honored in Chapter 9.”

Stockton was the first municipality to use the new California mediation law. Under the less than 6 month-old law, cities considering bankruptcy have to first mediate with creditors out of the public view for up to three months. The purpose of the law was to allow cities to settle their debts without filing for Chapter 9 bankruptcy protection.

However, the city spent around $3 million on mediation with creditors that included Wells Fargo & Co, the California Public Employees’ Retirement System, labor groups, and major bondholders.

June 14, 2012

Raley’s Mediation With Labor Over in CA

Author: Stephen Alexander – The mediation session between Raley’s and the United Food & Commercial Workers (UFCW) ended with no agreement on Friday, June 8. There are no new talks are scheduled and the workers’ contracts are extended are on a daily basis.

According to Raley’s spokesperson John Segale, the Union offered a contract which Raley’s management rejected. The company says that the proposed contract would increase operating costs an additional $20 million in just the first year. The proposal reportedly increased wages, included signing bonuses and higher costs for health and welfare of employees.

Mr Segale said that union leadership was “so out of touch with the realities of today’s economy. Management wants to lower expenses.

UFCW’s Local 8 President requested an audit of Raley’s “to justify the company’s claims of need for financial relief.” The Union also proposed “a budget for labor costs based on the audit’s findings.”

June 7, 2012

Post Mediation Stockton May Go Bankrupt

Author: Stephen Alexander – If the mediation between the city of Stockton and its creditors fails to reach an agreement, then Stockton City Manager Bob Deis may file bankruptcy.

The City Council in Stockton, Ca, in an almost unanimous vote on June 5, 2012, gave the City Manager the authority to file bankruptcy. The city faces bankruptcy because of its poor financial structure. If Stockton files bankruptcy, then it would become America’s largest city to seek Chapter 9 bankruptcy protection.

On July 1, the city faces a $26 million budget deficit. Moreover, in three years the deficit is expected to be $40 million. During the past three years, the city cut a total of $90 million from its budget. More cuts to the budget would leave a beleaguered police force facing desperation.

Marc Levinson, the bankruptcy attorney leading the city through negotiations, could only say that there is not yet a consensus. Due to the confidential nature of the proceedings, he was not free to discuss any details.

City Councilwoman Susan Eggman said, that the city did its job in educating the public, yet she is realistic about her hopes for a successful mediation.