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http://www.cnbc.com/id/44118282

Alabama County Gets a Reprieve, Staving Off Bankruptcy

Published: Friday, 12 Aug 2011 | 9:23 AM ET

By: Reuters

Alabama's Jefferson County on Friday held off from filing for bankruptcy over a $3.14 billion bond debt and allowed more time for talks with creditors to try to thrash out a restructuring agreement.

Birmingham is the county seat of Jefferson County Alabama.

The decision means Alabama's most-populous county will not—for the moment—declare what would be the largest municipal bankruptcy in U.S. history over its sewer bond debt.

Heeding a plea from Alabama Governor Robert Bentley for more time to obtain more state financial support for a restructuring deal, county commissioners said they would extend by more than a month, until Sept. 16, negotiations with creditors, among them JPMorgan Chase JPMorgan Chase and CoJPM

They authorized county Commission President David Carrington and Finance Chairman Jimmie Stephens to pursue "direct" talks with creditors to try to gain more acceptable terms for a definitive restructuring settlement.

Summing up a day of complex closed-door and public debate, Carrington said the creditors' settlement offer in its current form was "unacceptable." But he added: "There are some terms in here that we can work with."

"It's time the commission took ownership of this debt crisis," said Commissioner T. Joe Knight.