Gov. Tom Corbett and the PA General Assembly look set to bulldoze the cash-strapped city of Harrisburg's latest attempt to declare bankruptcy (which would make it easier to stiff bond investors who own the city's way-too-large pile of debt), with a law extending the ban on a Harrisburg Chapter 9 federal bankruptcy filing, until November.
But Harrisburg officials may have created enough doubt in the state's strategy to delay or derail it, writes veteran muni bond-watcher Matt Fabian in his Municipal Market Advisors newsletter.
Corbett's goal for the extension is "to give the new [state-appointed city financial] receiver, William Lynch, an opportunity to advance asset sales and private creditor negotiations," according to Fabian..
But City Council and the city controller and treasurer oppose the state's plan to sell off the city incinerator, garages, and other assets in order to pay incinerator bondholders because, as previous receiver David Unkovic noted before he felt obliged to resign, asset sales won't make Harrisburg solvent; it'll just leave the city broke and in debt, while making it easier for everyone who arranged the questionable incinerator deals to avoid responsibility for sticking city residents and taxpayers in a deep hole. (See links to audits here.)