Monday, October 17, 2011
HARRISBURG -- With the financial battle over bankruptcy in Harrisburg due to continue for at least another month, some creditors and vendors are worried about getting paid, an attorney for the city told U.S. Bankruptcy Judge Mary France today.
"Some creditors want cash or they won't do business with the city," lawyer Kenneth Lee of the firm Tucker Arensberg, which represents Mayor Linda Thompson, told the judge. "We have a city we have to run. We have fire and police who need gasoline that has to be paid for, for their vehicles."
He urged action as soon as possible on City Council's petition to declare Harrisburg bankrupt under Chapter 9 of the federal bankruptcy code, the first state capital city to file for bankruptcy in at least 40 years, according to bankruptcy lawyers.
Judge France set a hearing for Nov. 23 on City Council's petition for bankruptcy, giving the various parties in the case -- City Council, Gov. Tom Corbett, Mayor Thompson, Dauphin County, vendors and other interested parties -- time to file briefs and replies before then.
Everyone agreed that filing for bankruptcy under Chapter 9 is unusual, if not unprecedented.
"This is not a normal case," said lawyer Mark Schwartz, representing council. "I think that is something everyone can agree on."
The county, the state and the mayor all claim the filing of bankruptcy is illegal. All those entities had lawyers at today's hearing, along with half a dozen vendors who want to be included in the process of deciding if the city can declare bankruptcy.
Council hopes that creditors will reduce the city's $600 million in outstanding debt and bonds through the bankruptcy process, which has been used by Central Falls, R.I., Orange County, Calif., and Jefferson County, Ala,, in the last 15 years.
State officials contend a law passed in June prevents third class cities, such as Harrisburg, from declaring bankruptcy, but Mr. Schwartz claims that law is unconstitutional.
Meanwhile, the state Senate is due to vote Tuesday on a bill that would permit a state takeover of city government. If the bill is approved, Gov. Tom Corbett said he'll sign it, and the city will have 30 days to work out a plan to resolve its massive debt or Mr. Corbett would name a receiver to do what is necessary, including raise city taxes, to erase the debt.
HARRISBURG -- With the financial battle over bankruptcy in Harrisburg due to continue for at least another month, some creditors and vendors are worried about getting paid, an attorney for the city told U.S. Bankruptcy Judge Mary France today.
"Some creditors want cash or they won't do business with the city," lawyer Kenneth Lee of the firm Tucker Arensberg, which represents Mayor Linda Thompson, told the judge. "We have a city we have to run. We have fire and police who need gasoline that has to be paid for, for their vehicles."
He urged action as soon as possible on City Council's petition to declare Harrisburg bankrupt under Chapter 9 of the federal bankruptcy code, the first state capital city to file for bankruptcy in at least 40 years, according to bankruptcy lawyers.
Judge France set a hearing for Nov. 23 on City Council's petition for bankruptcy, giving the various parties in the case -- City Council, Gov. Tom Corbett, Mayor Thompson, Dauphin County, vendors and other interested parties -- time to file briefs and replies before then.
Everyone agreed that filing for bankruptcy under Chapter 9 is unusual, if not unprecedented.
"This is not a normal case," said lawyer Mark Schwartz, representing council. "I think that is something everyone can agree on."
The county, the state and the mayor all claim the filing of bankruptcy is illegal. All those entities had lawyers at today's hearing, along with half a dozen vendors who want to be included in the process of deciding if the city can declare bankruptcy.
Council hopes that creditors will reduce the city's $600 million in outstanding debt and bonds through the bankruptcy process, which has been used by Central Falls, R.I., Orange County, Calif., and Jefferson County, Ala,, in the last 15 years.
State officials contend a law passed in June prevents third class cities, such as Harrisburg, from declaring bankruptcy, but Mr. Schwartz claims that law is unconstitutional.
Meanwhile, the state Senate is due to vote Tuesday on a bill that would permit a state takeover of city government. If the bill is approved, Gov. Tom Corbett said he'll sign it, and the city will have 30 days to work out a plan to resolve its massive debt or Mr. Corbett would name a receiver to do what is necessary, including raise city taxes, to erase the debt.
