Bill > HB3212

This bill creates the Local Government Bankruptcy Neutral Evaluation Act, which establishes a structured alternative process for local government entities facing severe financial challenges before resorting to Chapter 9 bankruptcy. The bill allows a local public entity experiencing financial difficulties to initiate a confidential neutral evaluation process involving creditors, where a specially trained, impartial evaluator helps parties explore alternatives to bankruptcy and potentially negotiate debt restructuring. The neutral evaluation process is time-limited (up to 90 days) and requires good-faith participation from all parties, with the goal of avoiding a formal bankruptcy filing. If the neutral evaluation process fails or the entity's financial condition deteriorates, the local government can declare a fiscal emergency and file for bankruptcy, but only after holding a public hearing and making specific findings about the entity's financial state. The bill also provides protections for the evaluation process, including confidentiality of records and discussions, and creates exemptions in the Open Meetings Act and Freedom of Information Act to support the neutral evaluation process. Importantly, the bill emphasizes that bankruptcy should be a last resort and aims to provide a collaborative, transparent approach to addressing local government financial challenges while minimizing disruption to public services.

https://www.ilga.gov/legislation/BillStatus.asp?DocNum=3212&GAID=18&DocTypeID=HB&SessionID=114&GA=104