Reuters: Bankruptcy News: Alabama county creditors need 2nd try on panel-judge

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Alabama county creditors need 2nd try on panel-judge Jun 6th 2012, 17:49 By Melinda Dickinson BIRMINGHAM, Ala., June 6 | Wed Jun 6, 2012 1:49pm EDT BIRMINGHAM, Ala., June 6 (Reuters) - The judge overseeing the $4.23 billion bankruptcy case of Alabama's Jefferson County on We dnesday ordered creditors to take a second run at forming a panel to represent low-priority creditors in expected workout negotiations. U.S. Bankruptcy Judge Thomas Bennett ruled that two of the three currently proposed members of an unsecured creditors committee were ineligible because their claims against Jefferson County were of a different category. Jefferson County, which is home to Birmingham, filed the biggest U.S. municipal bankruptcy on Nov. 9 after a tentative workout, mainly with Wall Street creditors, unwound and scuttled concessions that may have been worth $1 billion to the cash-starved county. One of the ineligible creditors, the UAB Health System, may also have a possible conflict of interest since it has been billed by the county's sewer system for $1 million in unpaid sewer fees, Bennett said. Bennett also declared medical-services group Beckman Coulter Inc ineligible, while saying Bayerische Landesbank , the third proposed member of the panel, and Bankruptcy Administrator Thomas Corbett, can return on July 12 with other proposed members. "I'm inclined to defer and give the bankruptcy administrator some more time to come up with a committee that is more representative of the unsecured creditors," Bennett said. Unsecured creditors committees are sometimes formed in federal bankruptcy cases and members are obliged to fairly represent the interests of all creditors with the lowest legal claims on the assets of the bankrupt. Lawyers for both sides are battling regularly in court but show no signs of bargaining aimed at resolving the case, which analysts expect to run through 2013 or longer. Link this Share this Digg this Email Reprints

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