Harrisburg files for bankruptcy
Share with others:
HARRISBURG -- The financial mess engulfing the capital city has become even more complex, as City Council decided last night to hire a Philadelphia lawyer to file for municipal bankruptcy protection from its creditors.
The filing was made today in U.S. District Court in Harrisburg. It had been approved by four of the seven council members and comes as the Senate is set to vote next week on a bill to permit a state takeover of city finances, which are $600 million dollars in the red.
And it also comes as Mayor Linda Thompson is proposing a debt-repayment plan under Act 47 of 1987, which gives protection to distressed municipalities.
The council majority doesn't favor her Act 47 plan because it could lead to selling or leasing money-making items such as parking garages and possibly to layoffs of city workers.
Council decided to hire attorney Mark Schwartz to fight a state takeover over city finances and to apply for bankruptcy under Chapter 9 of the bankruptcy code. Seeking bankruptcy was something recommended by City Controller Dan Miller, who said it could lead creditors to lower their demands for repayment of loans.
State Sen. Jeffrey Piccola, R-Dauphin, and Rep. Glen Grell, R-Cumberland, have a bill to allow the state secretary of community and economic development to come up with a financial plan for the city within 30 days. If that wasn't adopted by city officials, Gov. Tom Corbett would name a "receiver" who would make all key decisions on city finances, rather than the council and mayor.
Mr. Corbett has said he would sign such a bill, but attorney Schwartz says it's unconstitutional for the state to take over city finances and may go to court to stop it.
First Published October 12, 2011 10:08 am