I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?
I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?
of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.
Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….
That would be interesting. California as an IMF client.
