Defaulted County Threatens To End Talks With Hedge Funds

Dec 20 2012 | 9:39am ET

Jefferson County, Ala., isn't too thrilled with the latest turn in its bankruptcy talks with hedge funds.

The county, which includes Birmingham, has been in negotiations with hedge funds and other holders of its defaulted sewer warrants. But last week, the hedge funds won permission to depose three county commissioners in advance of a possible lawsuit.

Jefferson County said it would end the talks if the commissioners were asked about settlement talks they've held with major creditors. U.S. Bankruptcy Judge Thomas Bennett, who is overseeing the county's bankruptcy, the largest municipal bankruptcy in U.S. history, said he would bar any questions that could interfere with negotiations.

The hedge fund creditors are led by Brigade Capital Management, Claren Road Asset Management, Fundamental Advisors and Monarch Alternative Capital. The sides met in New York last week and in Los Angeles last month.

"I'm not saying we're close yet, but we're at least talking," county Commissioner Jimmie Stephens said.

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