37 Campbell L. Rev. 187 (2015)
ABSTRACT. When revenue is low, municipalities often use general obligation or special revenue bonds to meet their budgetary needs. In issuing bonds, municipalities promise to repay bondholders; however, when a municipality files for Chapter 9 bankruptcy, repayment may be prolonged or even precluded. Special revenue bond repayment is subject to the “necessary operating expenses” of the municipality, as established by 11 U.S.C. § 928. However, the Bankruptcy Code leaves this phrase undefined. This Comment attempts to assign meaning to this phrase through an analysis of the Jefferson County, Alabama, bankruptcy. This Comment further identifies factors that investors should consider before purchasing municipal bonds to ensure a return on investment.
AUTHOR. MaryJane Richardson is a law student at Campbell Law School in Raleigh, NC