The same officials that controlled the municipality prior to the filing continue to run it, and the bankruptcy court has no authority to intervene or to deviate from their authority. Note that since the bankruptcy process changes nothing in the locality's political structure. Therefore, the incentives that promoted local spending and caused the bankruptcy to begin with, remain in force.

This explains why municipalities that file for Chapter 9 tend to return to insolvency after only a few years. The city of Mack's Creek, for example, filed for bankruptcy in 1998, then for a second time in 2000, and then it contemplated a third bankruptcy in 2004. The city of Westminster, Texas filed on 2000, and only 4 years later filed again. The city of Prichard, Alabama filed for bankruptcy at the end of 1999, came out of the bankruptcy only in 2007, and now, talks of a new bankruptcy...
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