A tentative deal reached with creditors in September to settle $3.14 billion in redink had been widely expected to avert bankruptcy. But the deal fell apart over what the commission described as creditors' refusal to meet the terms of previouslyagreed economic concessions.
There was also frustration over the fact that the estimated savings from the September agreement had shrunk by about $140 million, commissionsources said.
"In September 2011, the commission and receiver entered into a comprehensive term sheet setting forth a framework for the resolution of the sewersystem crisis," the commission said in a press release announcing the bankruptcy filing.
"Creditors ultimately were unwilling to make the economic concessionscontemplated in the term sheet and the receiver made additional demands inconsistent with the term sheet that the commission was unwilling to accept."
The commissioners, whoare elected and not political appointees, are the final arbiters over much of the county's business and day-to-day municipal affairs.
The bankruptcy filing by thesouthern U.S. county will add to concerns about the risks in the $3.7 trillion U.S. municipal bond market, which was hit recently by the high-profile debt crisis in