California IOU Class Action Filed
UPDATE 7/29/2009 – WE HAVE FILED A CLASS ACTION LAWSUIT REGARDING THESE CALIFORNIA IOUs. The suit seeks injunctive and declaratory relief on behalf of those who have been issued California IOUs. More details to come, please keep watching this page.
Confronted with a large budget impasse, the State of California is now issuing millions of dollars worth of “I.O.U.”s.
In addition to creating a major inconvenience for consumers, these I.O.U.s are also creating problems for small businesses that contract with the state of California.
So far, California has mailed $354 million worth of IOUs and plans to issue a total of $3 billion by the end of July. Around $140 million of the warrants are expected go to small business owners. While the state controller’s office won’t say exactly how many small companies will be hit, it’s likely to be a big number: The state’s department of general services says it holds $2.7 billion worth of annual contracts with at least 14,000 small companies, most of them California firms.