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Source: wordpress.com
Video: Harrisburg bankruptcy may not be wisest course: legal expert
Latest in Harrisburg Bankruptcy Saga
November 24, 2011 Latest in Harrisburg Bankruptcy Saga US Bankruptcy Judge Mary France has ruled that the bankruptcy petition filed by the majority of the city’s council members under Chapter 9 of the Bankruptcy Code is null and void. At a hearing to decide on the petition, Judge France ruled that the council was not authorized to file the petition. In her judgment, France said, “For Chapter 9 bankruptcy to work, all of the branches of the municipality must be on the same page. Therefore I find that city council was not authorized to file the petition on Oct. 11.” Harrisburg Mayor Linda Thompson and Pennsylvania State Governor Tom Corbett had not supported the bankruptcy filing. Other parties that opposed the bankruptcy were Harrisburg’s Fraternal Order of Police and the American Federation of State, County and Municipal Employees through their local affiliates. The council members who filed for Chapter 9 bankruptcy are considering an appeal. Now things point to Harrisburg being placed under receivership. In October, governor Corbett appointed David Unkovic, lead attorney for the state economic development division, as receiver. Under Pennsylvania law, Unkovic’s appointment must be endorsed by a state court. The material part of the law is Pennsylvania Act 26. In the hearing, Judge France asked lawyers from both sides to present their arguments on whether Act 26 is unconstitutional. Basically, Act 26 states that cities of Harrisburg’s size (pop. 49,500) are disallowed from filing for bankruptcy before July 2012. Act 26 was specifically brought up by lawyers representing Mayor Thompson and Governor Corbett as prohibitive to the bankruptcy filing. http://tampabankruptcy.pro/blog/Judge France found Act 26 to be constitutional and further added that the city council does not have the authority to unilaterally file for bankruptcy. Harrisburg’s debts stem from improvements made to the city incinerator that is unable to generate sufficient revenue to cover the debts. The state owes $242 million to bondholders, with $65 million already overdue. The bond market’s reaction to the judgment could not be immediately determined because of the Thanksgiving holiday weekend. But generally, market analysts believe that the judgment would augur well for the municipal bond market. Mayor Thompson recently revealed her $55.5 million budget for the year that begins in January that includes budgeted debt payments on the incinerator. The budget also includes the sale or lease of city assets aimed at raising $93.6 million to cover the payments. The city of Harrisburg, Jefferson County in Alabama and Central Falls in Rhode Island are 3 municipalities that have filed for bankruptcy this year. Now that Harrisburg’s filing has been thrown out (pending any appeal), it leaves Jefferson and Central Falls as the two municipality bankruptcies in the country. Since September 30, city and county debts have risen to more than $1.3 billion. This is more than two times the amount of debt from the previous three quarters combined, according to the Distressed Debt Securities Newsletter in Miami Lakes, Florida. http://tampabankruptcy.pro/blog/
Source: jdsupra.com
Pa. lawmakers OK longer Harrisburg bankruptcy ban
The extension barring Harrisburg from filing for bankruptcy was approved Saturday. It goes to Gov. Tom Corbett, who is expected to approve it. The original ban helped stop an effort by Harrisburg’s City Council to win bankruptcy protection in fall 2011.
Source: goerie.com
San Bernadino’s coming pension brawl
San Bernadino’s move to skip its CalPERS payments is a game-changer. It opens the door to reducing pension payments for its current and future retirees. It’s likely that San Bernadino will encounter significant legal costs, but those costs must be weighed against potential savings. Many will ask how San Bernardino will deal with the exodus of police and firemen following this move. The truth is that the city will be able to hire many more employees at more reasonable salary and benefit-levels. It really shouldn’t cost a community over $200,000 to compensate a safety worker.
Source: reuters.com
Bankruptcy may just be the start of Harrisburg’s headaches
etienne. Right, and people also do not understand bankruptcy. They think Bankrupcty is where debt goes away. Wrong-o wrong-o. Debt is shifted not gone. Vendors, some of them are small business people with employees to pay, creditors of the City from credit card companies, banks and bondholders, some of them have employees to pay – all get told by the judge they aren’t going to get paid. And viola! the debt of the bankruptcy filer is gone, and now all the people they owed have a problem. So just like they cascaded dumbbutt decisions through the housing industry and ruined it for everyone, they are about to do do the same thing with local gubmints nationwide. It could cascade to the states too !!! It’s all part of the destruction of America being caused by this childish urge to run to gubmint and get all your problems dealt with. Chapter 9 is the best option of the terrible options of bankruptcy. Stretching the debt instead of totally shifting a loss to the vendors and creditors is better. The gubmint officials who took on the rounds of dabt in the last 5 to 6 years should be held accountable. Sued by the now bankrupt constituents and stripped of their wealth. The only way to stop the madness is to make people pay for their stupidity instead of always creating new victims by pushing the problems to another set of people.
Source: nbcnews.com
Consumer bankruptcy types available in Pennsylvania
Chapter 13 bankruptcy, on the other hand, is the route usually taken by consumers who have more significant equity built up in property, which they want to keep. They might have steady income coming in but have fallen behind on their payments by reason of their debt burden. During this bankruptcy process, they get to keep their property while following a three- to five-year payment schedule approved by the court. At the end of that period, they should be caught back up on their debt payments.
Source: pa-bankruptcylaw.com
A tale of two cities: Will Hagerstown follow Harrisburg into bankruptcy?
[...] Harrisburg, the capital of Pennsylvania, is drowning in debt. City officials have known for more than four years that they’d have to deal with the fiscal mess, but they punted. The state has engineered a bailout plan, but the city council rejected it. Instead it has asked creditors to forgo as much as $100 million of the debt. Essentially, the city council is engaged in a giant game of brinksmanship with the state and creditors, daring them to come up with something that’s less onerous than the current state plan, which involves asset sales and renegotiating union contracts.Source: wordpress.com [...]
Source: wordpress.com