Bondholders Sue San Bernardino; Could Derail CalPERS’ Deal

Two creditors have formally challenged the bankrupt city of San Bernardino’s agreement with California's public pension system (CalPERS) to pay the fund in full when it produces a bankruptcy exit plan. Though CalPERS hasn’t been named in the lawsuit, it’s reviewing the case.

Challenge for CalPERS

San Bernardino issued bonds to raise money to fill a hole in its retirement fund, which is administered by CalPERS. The bankrupt city also makes regular payments on behalf of its employees to CalPERS, which in turn pays retired city workers.

Last year, the city made public an agreement with CalPERS to pay the...