The attorney for the Harrisburg, Pa., City Council said he might appeal the latest federal rejection of its Chapter 9 bankruptcy petition.
Mark Schwartz has 30 days to appeal Wednesday’s ruling by Judge Sylvia Rambo of the U.S. District Court for the Middle District of Pennsylvania in Harrisburg that upheld earlier decisions by bankruptcy Judge Mary France.
France, also in Harrisburg, invalidated the City Council’s bankruptcy filing on Nov. 23, saying it violated Pennsylvania law and needed Mayor Linda Thompson’s approval. She rejected an appeal by Schwartz on Dec. 11, saying it missed the Dec. 7 deadline.
Schwartz said France’s delays in issuing a written ruling, which came Dec. 5, required a deadline extension. “We could appeal to the appeals court. Frankly, that’s the best place for this,” said Schwartz, a Bryn Mawr, Pa., solo practitioner.
“Appellant City Council has not acted in good faith,” Rambo wrote Wednesday. “If City Council truly believed that the written opinion was needed, counsel could have filed a timely motion of time to file an appeal. The excuse for the delay is potentially frivolous.”
Harrisburg, the state’s capital, is about in debt for $310 million, roughly five times the size of its general fund budget, and has missed $65 million in bond payments related to an incinerator retrofit project. The state’s receiver, David Unkovic, is scheduled to issue a financial recovery plan for the city on Monday.
“There is a process for extending the time for an appeal of a bankruptcy determination. That process was invoked. There was never a hearing by Judge France to ascertain the underlying facts for invoking the rule that permits extended time for an appeal,” Schwartz said. “Briefs and argument should have been allowed by Judge Rambo. Another door should not have been slammed on Harrisburg.”
Rambo said the appeal would jeopardize the oversight process and financial controls for Harrisburg.
“The overseer has nothing to do with the bankruptcy case. Bankruptcy was filed well before the receiver was appointed,” said Schwartz, who filed for Chapter 9 on behalf of the City Council on Oct. 11. q
State legislation calling for a takeover of Harrisburg’s finances became law on Oct. 20, and four days later, Gov. Tom Corbett declared the city in a state of fiscal emergency. He nominated Unkovic, a longtime bond attorney and former chief counsel for the state Department of Community and Economic Development, on Nov. 18.
