THE AMERICAN CITY OF FAIRFIELD FILED FOR BANKRUPTCY

On May 19, 2020, the small American city of Fairfield, located in the state of Alabama, filed for bankruptcy protection. The experts note that such a move on the part of local authorities is still quite rare, despite the fact that the municipal budgets of various cities across the country are seriously devastated by the coronavirus pandemic.

A resolution, signed by the Mayor Eddie J. Penny, states that the city has exhausted all of its financial resources, despite several years of intensive work to strengthen them. The resolution is a part of a package of documents that was sent to the bankruptcy court in the northern district of Alabama. The documents, received by the court, mention the city’s assets and its obligations to the creditors for various amounts from $ 1 to $ 10 million.

Now the experts find it difficult to say whether the condition of the city’s financial state was spoiled by coronavirus and the restrictions that it caused in public behavior and the state economy. The text of resolution also contains information, stating that "in recent years, the city has experienced a significant decline in income due to the uncontrolled economic forces."

One of the reasons for the bankruptcy of the city, according to some experts, could be the dire state of the American metallurgical industry.

The fact is that the American metallurgical corporation U.S. Steel previously announced its intention to complete the construction of a new workshop at the factory, located in the city of Fairfield. An electric smelter, capable of producing up to 1.45 million tons of metal pipes per year was planned to be open in the second half of the year. However, the adverse situation in the industry, caused by the collapse of the US oil and gas sector, may interfere in the company's plans. Last month, the company already announced new layoffs.

It is known that one of the main creditors, involved in the insuring of a number of city bonds is the Ambac financial group.  Attorney R. Scott Williams, representing the interests of the city on behalf of the Rumberger, Kirk & Caldwell legal company, refused to comment on the reasons of the bankruptcy of the city.

About 20% of the city’s population actually lives below the poverty line.

The experts note that the city of Fairfield, located about 12 km from Birmingham, is a settlement with 11 thousand inhabitants, most of whom are African Americans. At the same time, the city itself is located in Jefferson County, which went bankrupt in 2011.