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8/20/08

By John Kocourek

 


Bankruptcy Court Report - Tuesday, 19 August...


After the City finished calling witnesses yesterday, Union attorney Dean Gloster asked Judge McManus to dismiss the case, and went into a lengthy summary to convince the Judge that Vallejo hasn't proved its case to qualify for Chapter 9 protection.  He invited the Judge to interrupt and ask questions during his summary, and several times, Judge McManus did interrupt to disagree with Gloster on the concept of "solvency" and to question the existence of money in other funds that Gloster suggested could be used to bail out the general fund.  Gloster blamed the BK on the bad decisions by the City and the Judge agreed that bad decisions had been made but that's why we're in bankruptcy court.

The union said there's an offer on the table that would give solvency, but apparently Judge McManus disagrees with the union's idea of  solvency and what it means for Vallejo.

At one point, the union made a spectacular offer:  They offered to allow the Judge to suspend the case for 90 days so they could go back to the table for more negotiations.  Judge McManus didn't think much of the idea and suggested that if they hadn't succeeded by now, then another 90 days wasn't going make any difference.

Gloster said there was a "civil war" going on in Vallejo, but the testimony of the City's witnesses was factual and tedious, and suggests otherwise.  If Gloster wants to give the impression of war, he'll need to put some passionate witnesses on the stand.  The war seems a bit one-sided, as illustrated by the union's purchasing of full page ads in the Times Herald.

Earlier in the day, Craig Whittom was questioned about the City putting tax measures on the ballot.  He stated that in order to get voter approval, City and labor would need to present a unified front.  The City's lawyer, Mr. Hile, introduced a new exhibit, which turned out to be photocopies of the full-page ad from Sunday's Times-Herald.  Judge McManus was curious... who paid for the ad?  Mr. Hile didn't know.... Mr. Whittom, do you know?  Nope, Mr. Whittom didn't know... but on close inspection, at the bottom of the ad, everyone could read...

"Your city employees, including police officers, firefighters, paramedics, and miscellaneous public employees, who maintain our streets, parks, traffic safety, water, and housing services, are paying for this ad."

That was the second time the Times-Herald made it into the proceedings on Tuesday.  Earlier, the union lawyer, Ms. Swanson, was asking Mr. Whittom about property sales and revenue that could be generated.  She mentioned a column that had appeared in Vallejo's newspaper and asked Mr. Whittom if Touro had offered more than a dollar for the the Mare Island property.  Apparently Ms. Swanson saw Richard Freedman's piece on Monday, where Freedman wrote "a little birdie told me" that Touro had offered the City $20 million for "a chunk o'land on Bare Island" but Vallejo turned it down in order to claim bankruptcy.  So Ms. Swanson wanted to know if Mr. Whittom was aware of any Touro offers.  He said he wasn't.


Thursday morning, the hearing resumes, possibly with a rebuttal of Gloster's summary/motion by the City's attorney, and possibly with  witnesses for the union.  There was a question of whether Roger Mialocq would testify.  I believe Judge McManus said he'd give a ruling on Monday concerning dismissal of the case.
 
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