Saturday, December 20, 2014

Moody's: Harrisburg may end up in Chapter 9 bankruptcy

Despite Gov. Corbett, bond-watchers think the state capital could end up under federal court protection, exposing public officials and bond pros to creditors and investigators

Moody's: Harrisburg may end up in Chapter 9 bankruptcy

Harrisburg's financial problems "could ultimately result in a Chapter 9 bankruptcy filing for the city," Moody's Investors Service said today in a report threatening to downgrade bonds from the city parking authority (they're already Ba3).

That's despite Gov. Corbett's efforts to impose a state receiver to sell city assets and cut city servcies to avoid a Chapter 9 filing. Bankruptcy could expose former public officials, lawyers, and bond professionals to scrutiny, creditor action and even public-agency investigation of hundreds of millions of dollars in questionable bond deals that have driven the state capital city toward default.

Harrisburg Parking Authority's "credit quality faces considerable downside risk from myriad uncertainties surrounding the city's eventual exit from fiscal distress, including the possibility that the HPA's assets might be taken by a bankruptcy court to pay off a portion of the city's debts as part of a future bankruptcy process," according to Moody's.

Also, "trust indenture amendments executed in July 2011 appear to prevent the sale or lease of HPA assets without ensuring full bondholder security." Which could quash the state-backed receiver's efforts, or the city's own attempts, to seize parking revenues.

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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