CalPERS loses round in SB bankruptcy fight

San Bernardino Bankruptcy

Grant Hindsley/AP

A San Bernardino sign on I-10 East is seen on Wednesday, July 11, 2012 in San Bernardino, Calif. The city filed for bankruptcy and is now caught up in a battle with the California Public Employees' Retirement System, which it owes $14 million in overdue payments.

California's biggest public pension system has lost its appeal of the ruling that allowed the city of San Bernardino to file for bankruptcy.

A bankruptcy judge rejected the request by the powerful California Public Employees' Retirement System to challenge the city's bankruptcy eligibility at the U.S. 9th Circuit Court of Appeals.

The Sacramento Bee says the decision Friday doesn't end the eligibility skirmish. CalPERS immediately took the matter to a U.S. District Court judge.

It's the latest round in the bankruptcy battle between the cash-strapped city and CalPERS. The city owes the pension fund $14 million in overdue payments.

Last month the San Bernardino City Council adopted a tentative plan to deal with all its creditors, including CalPERS.

San Bernardino, located 60 miles east of Los Angeles, filed for bankruptcy protection after learning it faced a $46 million deficit.

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