Bankrupt San Bernardino to impair bondholders, not Calpers, in exit plan -city attorney

Reuters reports:

Bankrupt San Bernardino will significantly impair its bondholder creditors while paying pension fund Calpers in full in a plan to be presented in May, City Attorney Gary Saenz said on Thursday.

San Bernardino has also not held any talks with its capital market creditors since September and has no immediate plans to do so before it presents its bankruptcy exit plan by a court-ordered date of May 30th, Saenz said.

Major creditors are viewed as less important creditors than Calpers, California's public pension fund, he said.

Capital market creditors in the San Bernardino bankruptcy include Luxembourg-based Europäische Pfandbrief-und Kommunalkreditbank AG (EEPK), holder of about $50 million in pension obligation bonds; Ambac Assurance Corp, which insures a portion of those bonds; and Wells Fargo Bank, the bond trustee and the flagship bank of Wells Fargo & Co.

Did you think owning general obligation bonds made you special? First in line in a bankruptcy court? Guess a again. It's not like we didn't warn people back in 2008.