ORANGE COUNTY IN BANKRUPTCY : Complex Pool Settlement Wins Overwhelming Support : Recovery: All but a few agencies give up the right to sue for the promise of eventual full restitution of investments. The plan now goes to bankruptcy judge for May 2 hearing.
The more than 200 schools, cities and special districts with money in Orange County’s bankrupt investment pool have overwhelmingly approved a complex plan to carve up the pool’s depleted assets, with all but two dozen agencies relinquishing their right to sue the county in exchange for a promise they will get all their money back eventually.
Tuesday was the deadline for agencies controlling 241 non-county pool accounts to vote on the settlement plan, which now heads to U.S. Bankruptcy Court Judge John E. Ryan for a May 2 hearing.
“We have a deal. That’s encouraging,†said Price Waterhouse accountant Bernie Burke, who has been keeping the official tally of votes for the committee representing pool participants.
Price Waterhouse had received 199 ballots as of Tuesday morning, Burke said. Twenty-two other agencies voted Tuesday, leaving only about 20 blank spaces on Burke’s tally. “We’ve got a few lost soldiers out there in the wilderness,†said Burke, guessing that many of those agencies are either defunct or have merged into others.
Since far more than the required 80% of the investors holding 90% of the assets approved the plan, county officials said they would extend the deadline and allow the final ballots to trickle in up until the bankruptcy court hearing.
Of the ballots Burke had received before Tuesday, 176 agencies selected Option A, in which participants will receive an average of 77 cents in cash for each dollar they had invested, another portion in recovery warrants and the rest in IOUs, but must agree not to try to seek more from the county in court.
Twenty-three agencies had chosen Option B, which pays them only the 77% back in cash, but allows them limited rights to sue.
Three groups that originally rejected the plan altogether switched their votes before Tuesday’s deadline, fearing that the money that once belonged to them would get divvied up before they had a chance to launch litigation to recoup it.
“It was just too risky,†said Bill Robertson, general manager of the Yorba Linda Water District, which took Option B at the last minute.
“Once the pool is disbursed, there’s little point to arguing over a pot of money that doesn’t exist,†agreed Keith Coolidge, spokesman for the Municipal Water District of Orange County, which switched to Option A. “We can get our money, we can be done with this and get on with the business of selling water.â€
The Buena Park Redevelopment Agency, which had also rejected the plan, voted Monday night to accept Option B.
On the final day before the midnight deadline, the proposed settlement garnered more support, with 20 community facilities districts controlled by the county Board of Supervisors signing on to Option A, and the Santiago County Water District joining those in Option B.
The city of Anaheim, which had about $170 million in the pool when the county filed for bankruptcy protection Dec. 6, was among the last to vote, selecting Option A at a 5 p.m. City Council meeting.
“Deciding on this option gives us the greatest possibility of avoiding future litigation while allowing us to receive the most money at the soonest possible date,†said City Atty. Jack L. White. “It also preserves the possibility for the city to recover 100% of the funds deposited in the pool.â€
Times staff writer Greg Hernandez and correspondents Shelby Grad and Lesley Wright contributed to this story.
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