Processing Magazine

Jefferson County, Ala., files for largest municipal bankruptcy in US history

November 22, 2011

MONTGOMERY, Ala. — Jefferson County, Ala., filed for Chapter 9 bankruptcy Wednesday, marking the largest municipal bankruptcy in U.S. history, The Associated Press reported.

Jefferson County, Alabama’s most populous county, filed for bankruptcy to give it protection from its creditors while it develops and negotiates a plan for its massive $4.15 billion debt.

The debt stems from an EPA-mandated sewer project that was fraught with political corruption and financial missteps.

"Jefferson County has, in effect, been in bankruptcy for three years," said Commissioner Jimmie Stephens, who made the motion to file for protection in federal bankruptcy court in northern Alabama.