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Governing Law for Municipal Bankruptcy in Illinois

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January 2014
Pratt's Journal of Bankruptcy Law

Under current bankruptcy law, units of local government cannot voluntarily petition for municipal bankruptcy under Chapter 9 without express and specific authority from the state. Currently, with the exception of the Illinois Power Agency, the state of Illinois has not specifically authorized its municipalities or any other local governmental units to petition for Chapter 9 bankruptcy. Until such time as the State of Illinois legislature provides specific authority to units of local government to petition for municipal bankruptcy, no such petition will be permitted.

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