IRVINE : School District Faces Possible Bankruptcy, Lawyer Warns

An Irvine Unified School District bankruptcy attorney painted a bleak future for the 21,700-student school system Tuesday night, warning that the district may go bankrupt unless the county releases funds soon for a $54.5-million debt payment due June 13.

“In the world of public finance, the period of time between now and June 13 is a very short period of time,” said bankruptcy attorney Marc Winthrop, hired by the school district in December. “There is the chance . . . that the district could go into default and may need to seek remedies” similar to those used by the county.

If it becomes apparent by early April that funds will not be released from the county pool in time, school board President Tom Burnham said, he will recommend that Irvine Unified officials begin talks with the state to keep the district operating. When a public school district files for bankruptcy, state-appointed trustees are typically appointed to administer district operations.

Burnham said the school district is facing a major debt payment earlier than most other county agencies, many of which may also be forced into default if the county does not act soon.

“You feel like you have a gun to your head, and on June 13 someone’s going to pull the trigger,” Burnham said. “If the state doesn’t come in at the front end, they may very well come in at the tail end. It will be a domino effect throughout the county.”

The Irvine school district and the city are among four county agencies that borrowed money to make an additional investment in the county pool.