| SAN FRANCISCO, July 27
SAN FRANCISCO, July 27 A federal bankruptcy
judge on Friday cleared the way for Stockton, California to cut
health care benefits for retirees while it is in bankruptcy
Stockton is seeking Chapter 9 protection from its creditors
and said that it would cut retiree health benefits while it
reorganizes. Retired employees sued to stop those cuts.
Judge Christopher Klein on Friday issued a temporary order
denying the bid to stop the benefit cuts, and he said a formal
decision was on its way.
Stockton's attorneys had argued that bankruptcy law gave the
city wide latitude on how to spend its revenue while it prepares
a plan to restructure its finances.
"For the reasons explained in the forthcoming decision of
this court, the Application for Temporary Restraining Order and
Preliminary Injunction or in the Alternative for Relief from
Stay is DENIED," Klein wrote.
"A further order will be entered contemporaneous with the
formal decision," the temporary order said.
The case in U.S. Bankruptcy Court, Eastern District of
California, is an adversary proceeding, 12-02302, associated
with the main bankruptcy case, 12-32118.