What’s Next
Orange County on Wednesday crossed a major hurdle when U.S. Bankruptcy Judge John E. Ryan approved the county’s bankruptcy recovery plan. What to expect in the next few weeks:
* County officials and financial advisors are scheduled to hold meetings in Orange County and “road shows” in New York to market about $920 million in bonds. The recovery plan will be effectively confirmed when the bonds are sold and proceeds used to repay Orange County’s debt.
* The recovery plan calls for the county to employ former state Treasurer Thomas Hayes as its litigation czar and provides him with a $50-million budget.
* Hayes is expected to use the money to pay lawyers to pursue lawsuits against several Wall Street brokerages and other firms the county blames for its bankruptcy. The county has already filed multibillion-dollar lawsuits against Merrill Lynch & Co. and its outside auditor, KPMG Peat Marwick. Other potential targets are the county’s former bond counsel, LeBoeuf, Lamb, Greene & MacRae, and numerous other brokers who sold the county risky securities before the bankruptcy. All of the firms deny wrongdoing.
* The county hopes to obtain more than $1 billion from litigation proceeds to recover its own pool losses and repay cities, school districts and other agencies that lost money when the investment pool crashed.
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