ORANGE COUNTY IN BANKRUPTCY : Agencies Can Still Draw From Pool

U.S. Bankruptcy Judge John E. Ryan approved a plan Friday that will allow investors in the county’s collapsed pool to continue drawing emergency disbursements through the end of April.

The move was greeted with relief from cities and school districts that have come to rely on the disbursements to meet debt obligations and pay vendors and employees.

Ryan’s action will extend by one month the period for investors to request money from the $5.7-billion pool. Since December, the pool’s nearly 200 investors have drawn about $800 million.

Under the plan approved by Ryan on Friday, pool investors will be able to withdraw a total of $1.25 billion. The old disbursement plan, which ended Friday, allowed investors to draw a total of $1 billion. Investors must prove that the withdrawals are for pressing needs and that no other revenue sources are available.

The new plan also allows pool participants to draw as much as 35% of their investments in emergency money. Individual school districts, which have the greatest need for cash, can draw as much as 60% as long as total withdrawals don’t exceed $1.25 billion.

Under the old plan, participants could draw up to 30% of their money, with individual school districts allowed up to 50% as long as total withdrawals didn’t exceed $1 billion.

Both county officials and attorneys representing pool investors agreed to extend the emergency disbursement period to April 30 in an effort to provide cash to pool participants who need it.

Prior to the extension agreement, more than 60 pool participants had requested emergency money over the last few weeks to beat Friday’s deadline.

All but three of those agencies agreed to withdraw their requests when the extension plan was announced.

One of the holdouts, Huntington Beach, requested $28.6 million.

John Poppin, an attorney representing the city, said the funds were needed to make a $15-million bond payment due this summer and to deal with “the tremendous cash needs” the city faces during the summer tourist season.

Poppin also said the city faced the loss of matching funds for various city projects that were placed on hold because of the financial crisis.

Ryan rejected Huntington Beach’s request.

Also on Friday, Anaheim sought $29 million from the pool--a transaction that would bring the city’s total withdrawals to 50%.

Lewis Rosenbloom, a lawyer representing Anaheim, told Ryan that the city might default on a $99.5-million debt payment if it didn’t have access to its pool money.

Ryan agreed to let Anaheim withdraw the money if the city proved it had no other means of paying the debt. But late Friday afternoon, Anaheim received a $75-million line of credit from the Industrial Bank of Japan and decided not to withdraw its money from the pool.

Ryan also granted a request from the city of Claremont to withdraw $1.7 million.

Pool participants are now considering a settlement proposal reached last week that would give school districts up to 90% of their money and all other agencies about 80% by June 5.