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Stockton to become largest US city to declare bankruptcy|
A home sale sign in Stockton, California, the United States, February 7, 2012
Wed Jun 27, 2012 6:58AM GMT
The city of Stockton in the US state of California is set to become the largest American city ever to declare bankruptcy as the financial troubles of the US deepen.
A formal bankruptcy filing may come as early as Wednesday following the failure of negotiations between Stockton's officials and creditors.
The northern Californian city, which has more than USD 700 million in debt, was ranked as America's most miserable town in 2010.
The river port city of 300,000 has suffered a plunge in revenues with the collapse of its housing market.
The city has over USD 300 million in outstanding debt, plus USD 450 million in health insurance and pension liabilities for city pensioners. Stockton's financial woes have been blamed on the 2009 US housing market crash.
In October 2011, a court rejected the filing of bankruptcy by Harrisburg, a city of nearly 50,000, due to the fact that a state law prohibited municipalities of a certain size from seeking legal protection from creditors.