On Wednesday night, the city council of Atwater, California declared a fiscal emergency placing the city of 28,000 on the path towards bankruptcy. Three cities in California, Stockton, Mammoth Lakes, and San Bernardino, have already declared bankruptcy. Though California law requires local governments to enter into talks with creditors to avert bankruptcy, municipalities can bypass that requirement by declaring a fiscal emergency prior to filing for bankruptcy. In fact, San Bernardino, which filed for bankruptcy on August 1, followed the same strategy to evade prolonged discussions with its creditors.
Source: JD Journal. Read full article. (link)