Alabama's bankrupt Jefferson County aims to sell $1.89 billion of municipal debt in late 2013 as part of a bankruptcy-exit plan that will hand historic losses to Wall Street banks and other investors, a lawyer for the county said on Wednesday.

"The buying should start December 2013," Kenneth Klee, a bankruptcy lawyer for the county, told Reuters after a bankruptcy court hearing in Birmingham, Alabama.

"A lot of people out there have money to invest and Jefferson County is going forward with a plan," Klee said of the offerings that were part of a tentative deal reached Tuesday by the county and creditors JPMorgan Chase, hedge funds and bond insurers.

Under the deal, which will be part of a reorganization plan that must be okayed by a federal judge and in a vote by creditors, the county is refinancing the $1.89 billion that will be paid back to creditors in America's largest municipal bankruptcy.

The repayments come after "haircuts", or reductions in claims and bond debts, of a scope unseen in America's municipal bond market since the 1930s. JPMorgan, which struck a $732 million settlement in 2009 related to Jefferson County's debt, on Tuesday agreed to give up about $842 million of the $1.218 billion of Jefferson County sewer debt it owns.

Klee, the county's lead bankruptcy lawyer, told U.S. Bankruptcy Court Judge Thomas Bennett during the hearing that Tuesday's agreements were tentative and relied on the county filing a plan of adjustment by July 1, as well as final approval of the plan by the judge by December 20.

Bennett said he would try to work to that schedule.

With Tuesday's agreements, Alabama's most populous county has negotiated deals in place that cover about 80 percent of the defaulted $3.1 billion of sewer-system debt that was a key driver of it's November 2011 bankruptcy filing.

Klee said the county was still talking with some creditors, including some banks holding about $138 million of warrants. In addition, Klee said, owners of some $534.1 million of debt were so far unknown.

"The parties are committed to going forward in a plan of reorganization," Klee said.

(Additional Reporting and Writing By Michael Connor in Miami; Editing by Tiziana Barghini and Bob Burgdorfer)