Kekst and Company is supporting PR for Assured Guaranty as the unsecured creditor of bankrupt Stockton, Calif., makes the public case that the city's Chapter 9 plan is unfair.
Assured backed pension obligation bonds and could face a loss of around $100M, according to Reuters, under a city plan to pay its pension fund and mostly skip the bond payments.
The city of 300K residents was allowed to move into federal bankruptcy protection by a federal judge April 1, despite the objections of creditors. It owes $900M to the California Public Employees Retirement System, its largest obligation, and has continued to make payments amid cuts to various services.
The bankruptcy judge, Christopher Klein, did not yet decide whether the pension payments must be altered.
Bermuda-based Assured Guaranty said Stockton's current plan "falls short of the fairness requirements mandated" by the federal bankruptcy filing. Kekst managing director Jeremy Fielding in New York and associate Donald Cutler in San Francisco are supporting AG's in-house team, Robert Tucker, managing director of IR and corporate comms., and Ashweeta Durani, VP of corporate comms.
CalPERS general counsel Peter Mixon fired back at AG, calling the company's public criticism "unfortunate."
"Unlike insurance companies, policemen, firefighters and other public employees are not in a position to evaluate credit risk of their employers," said Mixon.
Assured, which asked the judge to reject the bankruptcy petition with other creditors including National Public Finance Guaranty Corp., Frankling Advisors and Wells Fargo Bank, said it remains committed to working with the city.
Stockton city manager Bob Deis blasted the creditors' opposition and what he said was an unwillingness to negotiate. “It's unfortunate that we have been forced to spend millions of dollars, thousands of hours and almost a year on this effort," he said in a statement.
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