Chicago lawyer James E. Spiotto, a partner in the firm of Chapman & Cutler, has handled several municipal bankruptcy filings and has testified before Congress regarding this type of bankruptcy. In an interview Tuesday, he explained the ramifications of the move:

A: For the average employee or creditor, any past-due wages or money owed would not be paid until after the filing of the bankruptcy reorganization plan, unless the court specifically orders otherwise. In addition, the only bond debt paid during the bankruptcy would be special revenue bonds, which are specifically defined in the bankruptcy code as special taxes dedicated to payment of revenue bonds. It would not include any bonds payable from general sales taxes, property taxes or income taxes.

A: Any municipal debt has some market. The price of those bonds may significantly drop to the point they would be considered unattractive to sell. It's always important, not only for Orange County but for all municipalities, that people carefully assess the situation and find a quick and effective situation that maximizes value to all and provides the least amount of pain to the county, its citizens and its creditors. (Most California bond mutual funds are diversified, with potentially troubled Orange County bonds a small percentage of assets. Also, many of the bonds are insured.)