For those who feel that the Town of Mammoth has slipped down the rabbit hole never to stabilize, officials say there is a plan to work out of the huge $43 million lawsuit debt and back to the Town people want; but it will take time.
Following Mammoth Lakes Land Acquisition’s surprise public settlement offer a week ago for the Town to pay principle and interest of $86 million over 30 years, Town Manager Dave Wilbrecht described the current process with MLLA as one that could lead to settlement or to bankruptcy. His comments point to a path that would be required if the Town were to try for bankruptcy, but it wouldn’t necessarily lead there.
He said the Town sees the next step now as a third party mediator to look at the finances, do some due diligence and try to achieve a settlement. He explained that in California if a public entity is thinking about Chapter 9 and a re-structuring of debt, the Town “has to go through mediation.” Wilbrecht said that regardless of what MLLA does, some of the Town’s creditors will go to mediation. “We’ve been working on a restructuring plan,” he said.
MLLA’s attorney had stated in the March 23rd letter that his clients are not interested in mediation. Wilbrecht said if mediation does not work, then the Town would have to figure out how to pay the debt by the end of the fiscal year as ordered by the court. He said if the Town can not pay its bills, “We would go to bankruptcy court and ask for a process.” Wilbrecht said the judge would look at all the facts and arguments.
Asked if the MLLA debt would be reduced in formal bankruptcy, Wilbrecht said, “We don’t know that.” A bankruptcy judge would consider the situation and whether Mammoth qualified for bankruptcy. The judge would also determine payments by creditors. Wilbrecht repeated that the Town’s first interest is mediation. “We believe strongly,” he said, “that we can not pay the full amount.”
Asked if a bankruptcy judge could force the sale of the Mammoth-Yosemite Airport and the bell-shaped parcel owned by the Town to pay off its debts, Wilbrecht said he believes the way the law is written the Town “has a duty and obligation to fulfill its mission. Certain assets are needed to do that.” He said this doesn’t mean the Town couldn’t liquidate assets to help with a settlement. Wilbrecht said he believes the bankruptcy judge could order liquidation.
A major issue between the Town and MLLA is what makes up basic services in Mammoth Lakes – what government has to support. Wilbrecht said that Town officials will talk to the public about this. He is working on a public letter that the Town Council will consider when they meet April 4th. “The Town has wanted to communicate with the public, but we have been under a confidentiality agreement with MLLA not to,” said Wilbrecht. He did say that since MLLA has made details of their settlement offer public, the Town may say more publicly too.
Although Wilbrecht did not say so, most believe the legal and financial specialists the Town has hired must be advising the course of public versus secret communications and the labyrinth of steps that the Town must take to deal with its enormous money problem.