Could Bridgeport file for Chapter 9 bankruptcy without state permission in 1991?

Plain-English summary

Connecticut Attorney General Richard Blumenthal concluded that the City of Bridgeport lacked legal authority to file for Chapter 9 bankruptcy under the state law then governing its finances. The state treasurer, as chair of the Bridgeport Financial Review Board, had asked whether the city could file without the board's approval. The opinion answered that the board's enabling act “would prevent the City of Bridgeport from seeking relief under the Bankruptcy Code without the permission of the State,” and closed by saying that “the City of Bridgeport lacks the power to file for relief under the Bankruptcy Code.”

The Attorney General identified no express Connecticut statute authorizing such a filing. He also concluded that the General Assembly's assignment of budget control to the review board displaced any implied city authority. The board could approve Bridgeport's annual budget or, if it rejected a proposed budget, prepare one meeting the act's requirements. The opinion tied those powers to the General Assembly's stated purpose of restoring financial stability and preserving access to public credit markets.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

For Bridgeport officials and the financial review board: The opinion treated the board's budget-approval and replacement powers as central to the state's financial-control scheme. It concluded that this scheme left the city no implied authority to seek bankruptcy on its own.

For creditors and municipal-finance readers: The Attorney General's answer rested on Connecticut's particular Bridgeport oversight act and the absence of express state filing authority. The opinion did not decide whether Bridgeport's finances actually warranted bankruptcy; it stated that the Attorney General had been assured they did not.

Common questions

Could Bridgeport file for Chapter 9 without the review board's approval?

The Attorney General said no. He found no express state authorization for a filing and concluded that the board's statutory financial-control mandate precluded implied city authority.

Did the opinion say the board's approval alone would authorize a filing?

No. It spoke of permission of the State and concluded that the city lacked filing power under the state law it reviewed. It did not describe a procedure by which board approval alone would confer that power.

Why did the review board matter to the bankruptcy question?

The enabling act gave it authority to approve the city's annual budget and create a replacement if it rejected the city's proposal. The Attorney General treated that control as inconsistent with an implied city power to file for bankruptcy independently.

Background and statutory framework

The Bridgeport Financial Review Board arose from 1988 Conn. Spec. Acts No. 88-80, later amended by acts including 1990 Conn. Spec. Acts No. 90-31. The opinion quoted the General Assembly's finding of a Bridgeport financial emergency and its aim to impose financial-management controls. It also stated that the Bankruptcy Code preserved states' authority to control their municipalities' governmental powers and expenditures. Reading the state act in light of its declared purpose and budget powers, the Attorney General found that Bridgeport could not seek bankruptcy relief on its own.

Citations and references

The opinion discusses 1988 Conn. Spec. Acts No. 88-80 and 1990 Conn. Spec. Acts No. 90-31. It cites Beloff v. Progressive Casualty Ins. Co., 203 Conn., 45, 54 (1987), for the rule that statutes are read to give effect to legislative intent. Its Bankruptcy Code citation is garbled in the official HTML, so the original wording is preserved below without supplying a corrected section number.

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1991-formal-opinions/the-honorable-francisco-l-borges-state-treasurer-1991003-formal-opinion-attorney-general-of-connecti

Original opinion text

The Honorable Francisco L. Borges, State Treasurer, 1991-003 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

January 14, 1991

The Honorable Francisco L. Borges

State Treasurer

55 Elm Street

Hartford, CT 06106

Dear Mr. Borges:

As Chairman of the Bridgeport Financial Review Board ("the Board"), you requested my opinion on the legal authority of the City of Bridgeport to file for relief under Chapter 9 of the Bankruptcy code without the approval of the Board. Members of my staff have reviewed the applicable provisions of the Bankruptcy Code and, particularly, the Board's enabling legislation, 1988 Conn. Spec. Acts No. 88-80, as amended by 1989 Conn. Spec. Acts Nos. 89-24 and 89-47 and 1990 Conn. Spec. Acts No. 90-31 (collectively, "the Act"). The purpose of this letter is to confirm my prior oral advice that, even if the circumstances warranted, and we are assured that they do not, the Act would prevent the City of Bridgeport from seeking relief under the Bankruptcy Code without the permission of the State.

The Bankruptcy Code does not limit or impair the authority of the states to control the political or governmental powers of their municipalities including expenditures. 11 U.S.C. [903, 4 Collier on Bankruptcy] 903 (15th ed. 1984). In this regard, there is no express authority in the laws of this state for the City of Bridgeport to file for relief under the Bankruptcy Code, and the mandate given to the Board by the General Assembly preempts any implied authority for the City to do so.

The General Assembly provided for the creation of the Board as follows:

It is hereby found and declared that a financial emergency exists in the town and city of Bridgeport, that the continued existence of this financial emergency is detrimental to the general welfare of the city and the state, that the town and city's continued ability to borrow in the public credit markets and the resolution of this financial emergency is a matter of paramount public interest and that to achieve this resolution it is necessary, appropriate and an essential public purpose to provide in t his act for the financing of deficits resulting from the city's operations, the imposition of financial management controls and the creation of the Bridgeport financial review board for review the financial affairs of the town and city of Bridgeport, all in order to maintain access to public credit markets, to fund the city's accumulated deficits and to restore financial stability to the town and city of Bridgeport.

1988 Conn. Spec. Acts No. 88-80 ] 1 (emphasis added).

In order to deal with the financial emergency, the Board was given specific power not only to review the financial condition of the City but also to approve its annual budget. Moreover, if the Board rejects any budget tendered by the City it may create a new one which meets the requirement s of the Act. 1990 Conn. Spec. Acts No. 90-31, ]) 7 and 8.

It is axiomatic that statutes must be construed so as to give effect to the intent of the legislature. State of Connecticut v. Parmalee, 1987 Conn. 158, 161 (1985). Indeed, the primary rule of statutory construction is to ascertain and give effect to the intent of the legislature. Beloff v. Progressive Casualty Ins. Co., 203 Conn., 45, 54 (1987).

The General Assembly's recognition of the financial emergency in the City of Bridgeport and the specific powers given to the Board in the Act to control its finances preclude any authority in the City to seek bankruptcy. Accordingly, I reaffirm my prior advice that the City of Bridgeport lacks the power to file for relief under the Bankruptcy Code.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

RB/JGH/bjg

cc: William J. Cibes, Jr., Secretary, OPM

Donald Kirshbaum, Executive Director, Bridgeport

Financial Review Board

Sally Rutherford, Vice President, Standard & Poor's

Joan Dougherty, Vice President, Moody's Investor Services