Specifically: "If the City rejoins the County and the City subsequently goes bankrupt, who has to pay the City’s debts?"
No. The County, State, nor anyone else would become responsible for the City's Debts or expenses.
Here is what the lawyers of Polsinelli say:
"In the event the City of St. Louis became a municipality in St. Louis County and then subsequently filed for protection under Chapter 9 of the United States Bankruptcy Code, absent a new agreement to the contrary, the City of St. Louis would continue to be solely responsible for its legal debts, to the extent approved by the Bankruptcy Court. Neither of St. Louis County, the State of Missouri, nor any other third party would become responsible for any of the City’s debts and/or other expenses, absent their explicit agreement to do so. There is no law (either State or Federal) or court precedent that would lead to any other conclusion.
In the United States, a municipality may file for bankruptcy protection under Chapter 9 of the U.S. Bankruptcy Code.
One of the conditions that must be met prior to a municipality availing itself of Chapter 9 is that it must have specific State authorization to file. Missouri is one of only 12 states that specifically authorize its municipalities to so file without any further condition. (See 427.100 RSMo.)
In recent history, five (5) Missouri municipalities have filed for protection under Chapter 9. In no case was the host County or the State held responsible for any of the debts of the municipality.
So long as the County or State does not agree to become a guarantor on any municipal obligations, they cannot be held in any way responsible.
To hold otherwise would make these entities unwitting “insurers” of the debts of not only the City of St. Louis, but of the hundreds of other municipalities scattered across the State of Missouri. Such an outcome would encourage financial irresponsibility and lead to fiscal chaos.
In the event of a Chapter 9 filing, all aspects of the municipality are subject to the jurisdiction of the court; all debts (both general obligations bonds and revenue bonds); all matters of employment; all contracts; and potentially, all retirement obligations. However, the court does not have authority to dragoon in other unrelated parties, including governmental jurisdictions, and compel payment from them for items they never obligated themselves for."