Indiana’s Senate Committee on Judiciary will meet today to consider State Senator Ed Charbonneau’s proposal designed to help insolvent communities better manage their debts. Senate Bill 105 would offer financially stressed communities options including the appointment of a financial manager and ability to declare bankruptcy.
Under Charbonneau’s measure, local governments in the red could request the State to appoint a financial manager. This manager would work to make governments solvent again by addressing community affairs and helping to restructure debt and financial obligations.
Under the proposal, a municipality would be allowed to declare bankruptcy if they meet a number of requirements, including an inability to pay principal or interest on municipal bonds or make payroll payments for a given length of time.
Charbonneau said more than 27 states allow local governments to file for bankruptcy, but it is rarely used.