Hartford, Conn., on the brink of insolvency, hired Greenberg Traurig LLP as restructuring counsel, Mayor Luke Bronin announced Thursday.
Greenberg Traurig will provide legal services “as the city evaluates the full range of restructuring options to ensure its long-term fiscal stability,” Bronin said in a statement.
Although the statement dodged any reference to bankruptcy, Bronin himself has said repeatedly that the city is a candidate for a Chapter 9 bankruptcy filing.
“This is precisely what we need and I support the mayor’s decision to hire Greenberg Traurig,” said city Treasurer Adam Cloud.
Hartford last year received general obligation downgrades from Moody’s Investors Service and S&P Global Ratings.
Moody’s, which lowered Hartford’s bonds to junk in October, placed the city’s Ba2 rating on review for yet another downgrade six weeks ago. S&P on May 15 dropped Hartford’s GOs to BBB-minus from BBB. Both rating agencies have cited financial weakness, high debt and escalating pension costs.
Nancy Mitchell, a co-chair of the firm’s restructuring practice who works out of Greenberg Traurig’s New York office, will lead the firm’s team in Hartford. She has more than 30 years of experience in restructuring and corporate finance.
Mitchell is a former executive director for CIBC World Markets Corp.
“Nancy Mitchell and the team at Greenberg Traurig have extensive experience in municipal restructuring, and they will be working with us to examine all options for putting the City of Hartford on a sustainable path,” said Bronin.
Bronin, former chief counsel to Gov. Dannel Malloy, has asked state lawmakers for an additional $40 million in aid. The state, however, is stalemated over a proposed $40 billion, biennial spending plan and faces a deficit of up to $5 billion for the biennial fiscal 2018-19 budget.
Deficits continue to burden the state despite large tax increases in recent years.
“The fiscal challenges of Hartford are remarkable even by national standards. Hartford's junk bond rating is extremely rare for American cities,” Stephen Eide, a senior fellow at the Manhattan Institute for Policy Research, wrote in a commentary.
According to Eide, Moody’s assigns junk ratings to less than less than 1% of local governments. Hartford’s poverty rate, he added, places it in the top 10 cities with populations above 100,000.
Bridgeport, Connecticut’s largest city, filed for Chapter 9 bankruptcy in 1991, but a federal judge nullified the petition. State lawmakers approved a bailout bill for Waterbury in 2001.