Harrisburg’s City Council is appealing a federal judge’s rejection of an earlier appeal looking to overturn the nullification of its bankruptcy filing.
Mark Schwartz, the Bryn Mawr, Pa., attorney representing the City Council, filed the appeal on Thursday in the U.S. District Court for the Middle District of Pennsylvania in Harrisburg. Bankruptcy Judge Mary France, who on Nov. 23 declared the council’s Chapter 9 filing illegal, ruled Dec. 13 that the appeal missed a 14-day deadline for filing.
“What she did was an abusive discretion,” Schwartz said in an interview Wednesday. “I am convinced that her actions were in violation of the rules and due process. She didn’t even bother to hold a hearing,” His latest appeal also seeks a deadline extension for the initial appeal.
Schwartz said he needed the extra time because France delayed her written ruling. “It was an excusable delay,” he said.
The judge ruled orally in court and issued a written version Dec. 5.
She said the Oct. 11 bankruptcy filing, which the council authorized by a 4-to-3 vote, violated state law and was illegal without the consent of Mayor Linda Thompson.
Pennsylvania’s capital city is $310 million in debt, largely due to cost overruns to an incinerator retrofit project. According to court records, it has skipped about $65 million in bond payments. Gov. Tom Corbett last month named attorney David Unkovic receiver for the city.
Unkovic has until Feb. 6 to craft a financial recovery plan, having this week received a one-month deadline from the Commonwealth Court of Pennsylvania, which confirmed his nomination.
Unkovic, the former chief counsel to the state’s Department of Community and Economic Development — the agency charged with implementing the receivership — is widely expected to recommend selling the incinerator, which the Harrisburg Authority operates.
The authority, at Unkovic’s request, is restarting the process for selling the trash burner, the authority announced at Wednesday night’s meeting. Four companies, including one from Canada, have submitted bids for the incinerator.
One of the bidders is the Lancaster County Solid Waste Management Authority, which is offering an estimated $124 million, with no debt obligations. The Harrisburg Authority has not identified the other three.
Unkovic has attempted to defuse criticism about past ties to major creditors.
He has worked as a lawyer for Saul Ewing LLP, which represents the incinerator’s bond insurer, Assured Guaranty Municipal Corp.; Public Financial Management Inc., which represented Dauphin County in a financing of the incinerator debt; and Cozen O’Connor LP, which represented the state in its opposition to Harrisburg’s bankruptcy filing. Speaking publicly last week, Unkovic, while declining specifics, said he may seek clawbacks from creditors in relation to the incinerator financing.
“I think that a plan that’s going to work is going to require sacrifice from lots of entities interested in the city. It’s going to be difficult to get some to do it and others not to do it,” he told a crowd at Harrisburg’s Midtown Scholar Bookstore.
“For a plan to work, everyone has to contribute and I think that’s going to carry some weight, aside from all the legalities, and put pressure on people to contribute more to the solution,” Unkovic said. “I can’t say much more on that now.”
