Bloomberg News

Harrisburg City Council Loses Bid to Reinstate Bankruptcy

May 15, 2012

Harrisburg, Pennsylvania’s city council members can’t challenge the dismissal of the city’s bankruptcy, an appeals court ruled today.

The U.S. Court of Appeals in Philadelphia granted a request by Harrisburg’s mayor and the County of Dauphin to block the councilors attempt to appeal. The mayor, the county and the state of Pennsylvania opposed the bankruptcy when it was filed by a majority of the council in October.

U.S. Bankruptcy Judge Mary D. France in Harrisburg dismissed the bankruptcy on Nov. 23, saying it wasn’t authorized by state law. She later refused to let the council’s attorney, Mark Schwartz, challenge her ruling, saying that he waited too long. Her decision was upheld by U.S. District Judge Sylvia H. Rambo, who called the effort to appeal to district court “potentially frivolous.”

Schwartz said today he may ask the court to clarify the ruling.

Harrisburg, a city of 49,500, is insolvent in part because of $300 million in debt related to the overhaul and expansion of a waste-to-energy plant that doesn’t generate enough revenue. The city has missed payments related to the debt.

Pennsylvania Governor Tom Corbett has appointed two receivers with authority to impose a financial recovery plan on the city. The first resigned earlier this year, citing “political and ethical crosswinds.”

The second, retired U.S. Air Force Major General William B. Lynch, will seek to have his appointment confirmed by a state court later this month.

The council’s appeal is Harrisburg v. AFSCME District Council 90, 12-cv-00130, U.S. District Court, Middle District of Pennsylvania (Harrisburg). The bankruptcy case was In re City of Harrisburg, Pennsylvania, 1:11-bk-06938, U.S. Bankruptcy Court, Middle District of Pennsylvania (Harrisburg).

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

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


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