City OKs Proposal on County Bankruptcy

After agreeing that it is the most feasible solution, the City Council this week approved a bankruptcy settlement with the Orange County investment pool.

The action would be the second step for cities with claims against the pool. The first step was ratified by most cities, including Villa Park, last year. That move returned to the cities about 80% of their investment in the pool, which collapsed in December 1994.

The second step proposed by county government calls for the cities to get part of any money the county may get from suing finance institutions involved with its investments.

Villa Park had about $1.3 million in the investment pool and has recovered about $1 million so far.

City Atty. Leonard Hampel told the council Tuesday night that the county’s proposal does not guarantee that Villa Park will get back any money. But he said the plan is probably the best way for the city to proceed.

“It is impossible at this early stage to tell you whether those lawsuits are going to succeed in whole or in part,” Hampel said. “Nobody can tell you whether you’re going to get your 20% back . . . [but] it appears to be the most viable game in town.”

If the city rejected the settlement proposal and attempted to sue the county for the remaining city money, Hampel said, legal costs would be very high.