Bloomberg News

Harrisburg Incinerator Operator Files Bankruptcy Objection

October 26, 2011

(Updates with court filing excerpt in third paragraph.)

Oct. 26 (Bloomberg) -- Covanta Harrisburg Inc., the operator of the waste-to-energy plant blamed for the bankruptcy of Pennsylvania’s capital city, asked a judge to throw out the case, the first of several objections due this week.

Covanta, a unit of Covanta Holding Corp., repeated legal arguments already made by Harrisburg’s mayor and the state, which claim the bankruptcy was not authorized by local or Pennsylvania law.

“These actions demonstrate a lack of good faith on the part of the city,” Covanta said in court papers filed today in U.S. Bankruptcy Court in Harrisburg.

A majority of the Harrisburg council voted to put the city into bankruptcy earlier this month. Since then the mayor, Pennsylvania’s governor and creditors have all asked the judge overseeing the case to dismiss the bankruptcy petition.

U.S. Bankruptcy Judge Mary D. France scheduled a hearing for Nov. 23 to decide whether to let the case proceed. Objections to the petition are due Oct. 28.

Last year Covanta sued Harrisburg in an attempt to recover $1.9 million in missed loan payments related to the incinerator that are guaranteed by the city.

Harrisburg, a city of 49,500 and seat of Dauphin County, faces a debt five times its general-fund budget because of an overhaul and expansion of the incinerator, which doesn’t generate enough revenue. Guaranteed debt is about $242 million, with $65 million of it overdue, the bankruptcy petition said.

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

--With assistance from Romy Varghese in Philadelphia. Editors: John Pickering, Mary Romano

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

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


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