A Brief Overview of Municipal Bankruptcy

Stephen Lisauskas
Stephen Lisauskas

Stephen Lisauskas is an experienced municipal financial leader who has worked as the executive director of the Springfield Finance Control Board and the deputy town administrator of Natick, Massachusetts. Over the course of his career, Stephen Lisauskas has become familiar with many areas of municipal finance, including municipal bankruptcy.

Chapter 9, Title 11, is a unique bankruptcy filing available only to municipalities. The filing was designed to assist financially compromised municipalities in restructuring their debt.

In most cases, Chapter 9 bankruptcy allows a municipality to either extend debt maturities (as a means of reducing the principal or accrued interest) or entirely restructure the debt with the help of a new loan. The most important distinction between Chapter 9 bankruptcy and other types is that municipalities cannot be forced to liquidate assets to satisfy creditors. Such an act would violate the Tenth Amendment to the US Constitution and would leave a municipality with little infrastructure to support itself or its citizens, essentially rendering a filing useless.

There are a number of notable Chapter 9 filings in the history of the United States. The city of Detroit recently filed for bankruptcy to the tune of $18 billion, the largest such filing in the nation’s history.

Edward J. Collins, Jr. Center for Public Management Helps Holliston

Edward J. Collins Center for Public Management pic
Edward J. Collins Center for Public Management
Image: umb.edu

Vice President of Government Affairs and Municipal Partnerships at WasteZero, Stephen Lisauskas also serves as a Senior Associate at the Edward J. Collins, Jr. Center for Public Management at the University of Massachusetts, Boston. Stephen Lisauskas has consulted in matters related to municipal business process improvement and distressed city engagements since 2010.

In April of 2016, the Town of Holliston entered a contract with Edward J. Collins, Jr. Center for Public Management. The Center, paid through a $25,000 state grant supported by Governor Charlie Baker and Lieutenant Governor Karyn Polito, will employ experts to evaluate the Town’s long-term capital needs, setting a priority timeline for when each item should be addressed over a period of five years. Additionally, recommendations offered will include a method for funding each initiative in a reasonable, but ambitious manner.

The Holliston project is one of approximately 80 engagements in which the Center will assist municipal governments in 2016. With the aid of the Collins Center’s experts, the Town intends to make the best use of taxpayer resources, improve services, and provide more value to residents of the community.