Bankruptcy
Apr. 24, 2020
Suggestions states and cities can file for bankruptcy bring up constitutional questions
The legal disputes involve the question: If a state cannot make good on its financial obligations, should that loss be paid by taxpayers nationwide or should it be born by municipal bond holders who have financed the state?
Suggestions in Washington D.C. that states can file for bankruptcy rather than depend on American taxpayers to bail them out of their financial messes would require a change to federal law that would almost certainly get hung up on constitutional grounds, according to bankruptcy experts.
The legal disputes involve the question: If a state cannot make good on its financial obligations, should that loss be paid by taxpayers nationwide...
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