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Proposed Illinois Law Would Allow For Municipal Bankruptcy

On January 26, 2015, Representative Ron Sandack (R-Downer's Grove) filed HB 298 that would amend the Illinois Municipal Code to allow a city, village or incorporated town to file a petition and exercise power pursuant to federal bankruptcy law. (HB 298)

Mark McClenathan previously analyzed the availability of bankruptcy for Illinois municipalities and concluded that the U.S. Bankruptcy Code only allows a municipality to reorganize its debts under Chapter 9 of the Code when specifically authorized by state law. (Municipal Bankruptcy - Can an Illinois Municipality File for Bankruptcy Protection?). It would appear that HB 298 provides statutory authorization for a city, village or incorporated town to file for bankruptcy protection.

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Of Counsel

Chrissie's practice is focused on government law, representing municipalities and other public entities in a broad range of issues, including administrative and regulatory law, the operation and governance of critical services, infrastructure construction and financing, council procedures, tax increment financing and economic development. Before joining Heyl Royster, Chrissie served as the City Attorney for Canton, Illinois for seven years where she managed all legal aspects of a municipal corporation.

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