May 23 (Bloomberg) -- Vallejo became the largest California city to seek bankruptcy protection a week after it rejected an offer by labor unions for $10 million in pay cuts.
The Northern California city listed assets of $500 million to $1 billion and debt of $100 million to $500 million in its Chapter 9 filing today in U.S. Bankruptcy Court in Sacramento. Bankruptcy protection would keep city services running and freeze creditor claims while officials devise a recovery plan.
``It's a bittersweet moment,'' City Councilwoman Stephanie Gomes said in a phone interview. ``It's bitter because our city is in such pain, but it's sweet because we are finally addressing our problems. We are finally addressing it head on.''
The filing came two weeks after the City Council's unanimous decision to file court papers seeking bankruptcy and talks with public safety labor unions failed to produce enough savings to keep the San Francisco suburb solvent. The bankruptcy makes Vallejo the first local government in the state to seek protection from creditors after running out of money amid the worst U.S. housing slump in 26 years.