Bloomberg News

Harrisburg Judge to Oversee City’s Disputed Bankruptcy Case

October 13, 2011

(Updates with lawyers’ filing in third paragraph.)

Oct. 13 (Bloomberg) -- Harrisburg, Pennsylvania’s disputed bankruptcy will be overseen by the city’s chief U.S. bankruptcy judge as lawyers for the city, state and creditors said they intend to join the case.

U.S. Bankruptcy Judge Mary D. France was named to handle the case yesterday by the head of the U.S. appeals court for the Pennsylvania region, as is required by Chapter 9 of the U.S. Bankruptcy Code.

Lawyers for Harrisburg Mayor Linda D. Thompson, who opposes bankruptcy, filed a notice with the Harrisburg court saying they intend to represent the mayor and the city. The four council members who voted to authorize the bankruptcy filing hired a different attorney, Mark D. Schwartz.

Tucker Arensberg PC was hired by the city and mayor to oppose the bankruptcy filing, Kenneth W. Lee, one of the Pittsburgh-based firm’s lawyers, said in an e-mail. Lee declined to comment on his clients’ strategy.

Jason Hess, the acting city solicitor, told the four council members that the decision to file for bankruptcy wouldn’t be binding because it wasn’t reviewed by his office before the vote.

Harrisburg filed less than a month after Alabama’s Jefferson County Commission voted to try to avert what would have been the nation’s biggest municipal bankruptcy, and nine months after Vallejo, California, emerged from Chapter 9.

The petition lists among the creditors insurer Ambac Financial Group Inc., due more than $70 million, and Covanta Holding Corp., with about $120 million of bonds and advances of funds to Harrisburg. Assets and debt are both between $100 million and $500 million, according to the petition.

The case is In re City of Harrisburg, 11-06938, U.S. Bankruptcy Court, Middle District of Pennsylvania (Harrisburg.)

--Michael Bathon in Wilmington, Delaware, and Romy Varghese and William Selway in Harrisburg. Editors: John Pickering, Stephen Farr

To contact the reporter on this story: Steven Church in Wilmington at schurch3@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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