Harrisburg council seeks bankruptcy: Update
Lawyer Mark Schwartz, acting for the city council, says he seeks Chapter 9 reorganization in the face of a threatened state takeover
Harrisburg council seeks bankruptcy: Update
Joseph N. DiStefano
UPDATE: As expected, Harrisburg Mayor Linda Thompson, Gov. Corbett and State Rep. Jeffrey Piccola, the Republican who represents the city and its Eastern Shore and southern suburbs in the state Senate, are opposing Harrisburg City Council's attempt to evade takeover by filing for bankruptcy protection. AP story here.
LAST NIGHT: The city of Harrisburg, state capital of Pennsylvania, has filed for bankruptcy protection from its creditors under seldom-used Chapter 9 of the U.S. bankruptcy code, says Mark Schwartz, the Bryn Mawr lawyer hired by Harrisburg City Council members last month.
"I filed the petition by fax tonight" at U.S. Bankruptcy Court in Harrisburg, Schwartz told me by phone.
The city council, which he said is empowered to seek federal bankruptcy protection under Pennsylvania's Act 47 governing distressed municipalities, seeks to stay creditor lawsuits by its bond insurers and others who may seek to be paid before other creditors. The city faces large payments for a troubled trash incinerator project and other spending it would have difficulty funding from its current budget and taxes.
Harrisburg's finances are also the subject of proposed state laws that could force asset sales, city employment cuts and other cost-cutting actions. A majority on Council has sought to block what members consider a state takeover as they push a commuter tax on state workers and other financing plans. Harrisburg Patriot-News says here that Council approved Schwartz's bankruptcy petition in a 4-3 vote tonight. Harrisburg is one of a number of municipal governments that have been downgraded by credit rating agencies during the prolonged economic slump as they struggle with funding for public utilities or private development project finance schemes. Others including Collingswood, NJ, and Scranton and Lackawanna County, Pa.
Just the first of many. Instead of cutting spending and planning for this economy for the past several they were still blowing taxpayer money and now are bankrupt.— Taxpaying Voter
Bank of America and all of the insolvent too big to fail banks, were saved. We found the money to save them, pay them their opulent salaries and bonuses and return them to a high level of profitability.
Why, if we found the money for them, can we not now find the money for the rest of America that is going under? Why all of a sudden, is there no money to be found? Why is austerity and budget cutting the answer for the public when pouring free, zero interest liquidity into the banking system to rebuild their balance sheets the answer for them?
The answer is that there is a dual state operating, one for the first class citizens, the 1% and their corporations and another for the rest of us 2nd class citizens. It is as if America has been transformed into an entity ruled by the Uniform Commercial Code and gimmick stock classes of preferred , Class A voting and Class B no bodies is how we now structure the political rights of our citizens. This is not the USA under the US Constitution, but the USA as controlled by the few with most financial stake. One Person One Vote. That is Democracy. Not One BILLION shares of Stock, All of the Power!!!
Comment removed.- The government didn't make nearly as much money back on its investment as they should have. Besides, that the gov made money isn't the point. 1) They should've made more (like Buffet did on his Goldman Sachs deal), and 2) the bailout itself is special treatment regardless of whether the gov profited or not. The banks owe their existence to the taxpayers. — Noonan
- How many of this nation's state capitols are in a similar financial condition? What percentage of this city is filled with exempt property? Perhaps selling some of that state owned land would be of more benefit to the people?— Moving On
- harrisburg is a unique mess. They are a very small city (currently 47,000) that pretended they were an equal to Philly and Pittsburgh. They always thought that the state government would bail them out. Why? Because that is what Fast Eddie kept telling them. They were advised to shut down the incinerator or to contract out the plant to a company that knew how to modernize it. Instead, under Stephan Reed and a long time Democrat city council (note how the articles never mention that the real problems are due to the Democrats) ignored the advice and awarded a no-bid contract that nearly tripled the original price. All the while the contractors were major democrat campaign donors. I would like to see the bankruptcy court investigate that link and it has the authority to request a criminal investigation. In fact, the city council is desperate to avoid a state take over for that reason. It is true corruption.— Dutch-wayne
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good. bankruptcy is the only way to solve harrisburg's crushing debt problem. how long until philadelphia, sucked dry by vampiric unions, follows suit with its 40% funded pension plans?— oliver north
