Is Bankruptcy an Option for Pinckneyville?
</element><element id="paragraph-1" type="body"><![CDATA[ Mayor Joe Holder is committed to making decisions that will stabilize the City of Pinckneyville's finances, and much of the town's fiscal stress is not of its own making.
The State of Illinois paying its bills at the Pinckneyville Correctional Center alone would make a huge difference.
Yet, as more small towns across Illinois face financial ruin, a Du Quoin attorney has begun doing the homework on how a town can use bankruptcy law to buy time to get its house in order.
Attorney Matt Benson's research is contained in a thoughtful letter to the Du Quoin Evening Call, but the primer he has created warrants its use as news. Mr. Benson writes:
"The City of Pinckneyville currently finds itself in dire financial straits. It appears, at first glance, that these difficulties are due no to the mismanagement of municipal funds, but rather due to an unforeseeable set of fiscal challenges resulting from the economic downturn that has beset the nation.
"City officials have proposed consolidating public utilities with O'Fallon's Environmental Management Services. If the numbers that have been made publicly available are even vaguely accurate, such a measure would be woefully insufficient to cure the city's financial ills. In the preceding month, the city's income amounted to approximately $400,000, a sum dwarfed by its $604,000 expenditures. If such months become a regular occurrence, the city will require drastic restructuring measures.
"One avenue for such a restructuring is Chapter 9 of the Bankruptcy Code. Originally developed to help cash-strapped communities during the Great Depression, municipal bankruptcy allows insolvent communities to adjust their liabilites and develop a plan to make their way back to fiscal health. It allows municipalities to utilize bankruptcy protections that are comparable, if not superior, to those enjoyed by corporations availing themselves of Chapter 11.
"Chapter 9 is not a mechanism for liquidating a community's public assets, or a method of ending the community as we know it. It is simply the acknowledgement of the fact that the path the city is currently on is no longer working, and that sweeping changes are needed to reverse the city's fiscal woes.
"The city council will be understandably resistant to such a measure. Some will consider this an avenue of last resort, as perhaps it should be. However, there is little sign that the economic woes of this community, this region, or this nation will relent at any time in the immediate future. This type of reorganization is easier to facilitate if it is undertaken earlier rather than later.
"No community wants to file for bankruptcy, much like no individual wants to file for bankruptcy. However, it could be argued that those who need to file for bankruptcy ought to file for bankruptcy. The time is rapidly approaching for the City of Pinckneyville to determine exactly what it necessary to do," Benson said.