A judge accepted the California city of Stockton’s bankruptcy application on Monday, making it the most populous city in the United States to file.
U.S. Bankruptcy Judge Christopher Klein said declaring bankruptcy is needed to allow the city to continue to provide basic services.
“It’s apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law,” Mr. Klein told the Associated Press.
Attorneys for Stockton said the city’s budget and services had been cut to the bone.
“There’s nothing to celebrate about bankruptcy,” City Manager Bob Deis told the AP. “But it is a vindication of what we’ve been saying for nine months.”
The city of nearly 300,000 people “has become emblematic of government excess and the financial calamity that resulted when the nation’s housing bubble burst,” the AP reports.