Mammoth Lakes, California filed on Tuesday for Chapter 9 bankruptcy protection from its creditors due to a nearly $43 million legal judgment against it.
The filing follows a vote Monday by Mammoth Lake’s town council in favor of a bankruptcy filing, specifically to seek protection from the property developer awarded the judgment against the resort town of about 8,000 residents in the Sierra Nevada mountains.
The developer, Mammoth Lakes Land Acquisition, is the town’s largest creditor, according to documents filed in U.S. Bankruptcy Court, Eastern District of California (Case 12-32463).
The company will contest the town’s eligibility for Chapter 9 protection, said Dan Brockett, a lawyer for the company.
The company and Mammoth Lakes have been in a legal fight that began in 2006 over a property development dispute.
Stockton, a city of nearly 300,000 people in California’s Central Valley, filed for bankruptcy protection last week, becoming the most populous U.S. city to seek protection from its creditors.
The Sacramento court in which Mammoth Lakes filed for bankruptcy protection is due on Friday to hear Stockton’s Chapter 9 case.