Reuters: Bankruptcy News: UPDATE 1-Stockton, Calif., insurer contests city bankruptcy

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UPDATE 1-Stockton, Calif., insurer contests city bankruptcy Aug 9th 2012, 15:52 Thu Aug 9, 2012 11:52am EDT Aug 9 (Reuters) - A unit of insurer MBIA Inc challenged Stockton, California's eligibility for bankruptcy, saying the city had not negotiated with creditors in good faith and had given preferential treatment to the California Public Employees' Retirement System. A federal judge must approve Stockton's request for Chapter 9 for the city to reorganize its debts under court protection from creditors. National Public Finance Guarantee Corp, which insured nearly $94 million of the city's revenue bonds, said the city was required to negotiate in good faith with creditors before filing, according to the objection filed in bankruptcy court. Bond insurer Assured Guaranty Ltd has also questioned Stockton's eligibility for bankruptcy in public statements and has until the end of the day on Thursday to file a motion with the court.

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