HB0438 Summary - Local Government Bankruptcy Neutral Evaluation Act

• Creates the Local Government Bankruptcy Neutral Evaluation Act allowing local public entities unable to meet financial obligations to initiate a confidential neutral evaluation process with creditors and stakeholders before filing for Chapter 9 bankruptcy protection.

• Establishes procedures for selecting a qualified neutral evaluator (requiring 10+ years bankruptcy experience or expertise in local government finance), conducting negotiations in good faith, and limiting the evaluation process to 60 days (extendable to 90 days with agreement).

• Requires local entities to pay 50% of evaluation costs and creditors to pay the remaining balance unless otherwise agreed, with evaluators authorized to assist parties in negotiating pre-petitioned plans of readjustment.

• Exempts all records and information related to the neutral evaluation process from public disclosure under Freedom of Information Act and allows public bodies to hold closed meetings related to the process under the Open Meetings Act.

• Permits local entities to file for Chapter 9 bankruptcy only after completing a neutral evaluation process or declaring a fiscal emergency through majority vote at a public hearing with evidence that the entity cannot pay obligations within 60 days.