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Judge approves California city’s bankruptcy plan

FILE - In this June 27, 2012, file photo, pedestrians cross a street near the Bank of Stockton in Stockton, Calif. Residents in the California city of Stockton will likely learn Thursday, Oct. 30, 2014, if they can put more than two years of financial uncertainty behind them. Marking a critical moment in the bankrupt city's financial recovery, Stockton will ask U.S. Bankruptcy Judge Christopher Klein to approve a plan for reorganizing more than $900 million in long-term debt over objections from a lone creditor who says it was treated unfairly. (AP Photo/Gosia Wozniacka, File)
FILE - In this June 27, 2012, file photo, pedestrians cross a street near the Bank of Stockton in Stockton, Calif. Residents in the California city of Stockton will likely learn Thursday, Oct. 30, 2014, if they can put more than two years of financial uncertainty behind them. Marking a critical moment in the bankrupt city's financial recovery, Stockton will ask U.S. Bankruptcy Judge Christopher Klein to approve a plan for reorganizing more than $900 million in long-term debt over objections from a lone creditor who says it was treated unfairly. (AP Photo/Gosia Wozniacka, File) FILE - In this June 27, 2012, file photo, pedestrians cross a street near the Bank of Stockton in Stockton, Calif. Residents in the California city of Stockton will likely learn Thursday, Oct. 30, 2014, if they can put more than two years of financial uncertainty behind them. Marking a critical moment in the bankrupt city's financial recovery, Stockton will ask U.S. Bankruptcy Judge Christopher Klein to approve a plan for reorganizing more than $900 million in long-term debt over objections from a lone creditor who says it was treated unfairly. (AP Photo/Gosia Wozniacka, File)

By Associated Press 1 min read

SACRAMENTO, Calif. (AP) – A judge has approved a debt plan by Stockton, California, one of the largest U.S. cities to declare bankruptcy, allowing it to reorganize more than $900 million in long-term debt.

U.S. Bankruptcy Judge Christopher Klein said Thursday that Stockton can use the plan to exit the court’s Chapter 9 protection, which it sought in 2012.

The city negotiated deals with all major creditors except Franklin Templeton Investments.

The investment firm argued the city wasn’t touching a massive employee pension fund but was asking the company to walk away from collecting nearly $32.5 million still owed.

Klein ruled earlier this month that bankruptcy law allows the city to treat pension obligations like any other debt, meaning the city could trim benefits.