A federal bankruptcy court judge on Friday approved the Los Osos Community Services District’s bankruptcy plan, according to Marshall Ochylski, president of the district’s board of directors.
Judge Robin Riblet approved the plan.
Ochylski said the district had to demonstrate to Riblet that its plan made its “best efforts” to maximize the return to its creditors.
He said the plan approved by the court resolves all lawsuits and claims arising from the district’s former wastewater project, and puts an end to more than six years of district involvement in numerous legal proceedings.
Under the plan, Ochylski said, the district will pay in full, over time, holders of bonds issued in connection with the former wastewater project, as well as loans the district has taken out to pay for improvements to its water system and other district property.
The district, he added, will pay contractors and other creditors with approved claims arising from the former wastewater project between 35 and 40 percent of their claims.
It will not pay anything to the Regional Water Quality Control Board for fines it assessed against the district or to claims by the State Water Resources Control Board for loans it made to the district to build the former wastewater project, Ochylski said.