DALLAS - The Big Oaks, Tex., Municipal Utility District plans to file for Chapter 9 bankruptcy protection so it can reorganize $2.55 million of defaulted unrated debt and lower its tax rate, now believed to be one of the highest in the state.

Ray Hutchison, senior partner at Hutchison Boyle Brooks & Fisher in Dallas and bond lawyer to the district, said the issuer will ask the Texas Water Commission by Sept. 1 for state approval to file for bankruptcy. Chapter 9 is the section of federal bankruptcy law under which municipalities may file for protection from creditors.

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