Franklin Advisers in unique position as City of Stockton bondholder
Clients Franklin Advisers, Inc.
Jones Day represents Franklin California High Yield Municipal Fund and Franklin High Yield Tax-Free Income Funds as creditors in the chapter 9 case of the City of Stockton, California. Franklin is the sole holder of the $35,080,000 Stockton Public Financing Authority Lease Revenue Bonds, 2009 Series A (Capital Improvement Projects) and stands in a unique position as the only beneficial owner of bonds that participated in the prepetition neutral evaluation process contemplated by California Government Code section 54760 et seq., and, the only bondholder whose rights and remedies have been implicated without its consent under the City’s proposed plan of adjustment.
Franklin objected to the City’s plan of adjustment and ultimately succeeded, following a one-week contested confirmation trial, in establishing a value of the collateral securing Franklin’s bonds in excess of $4 million. Other important confirmation issues, including whether the City should have attempted to adjust its pension liabilities pursuant to its plan of adjustment, remain pending and subject to additional post-trial briefing.