USA cities filing bankrpcy

BornAgain2 · USA cities filing bankrpcy

Harrisburg Pennsylvania files for (rare) Chapter 9 Bankruptcy
October 12, 2011 Pennsylvania's capital, Harrisburg, filed for a rare Chapter 9 municipal bankruptcy after it was unable to resolve its debt crisis with creditors and faced a possible takeover by the state. Harrisburg becomes one of the biggest cities to opt for the little-used chapter of the U.S. bankruptcy code.

Orange County, California, filed the largest Chapter 9 bankruptcy nearly 20 years ago after losing more than $1 billion in soured investments. Harrisburg said in a court filing it was unable to continue paying for critical services as well as roughly $300 million in debt that funded an incinerator project. Mark Schwartz, the council's attorney in this matter, said that the bankruptcy filing would give the city "bargaining power" with its creditors and with the state, which is considering a takeover plan.

"They were tired of being humiliated and denigrated," he said of the council members who voted for a bankruptcy filing on Tuesday. Chapter 9 is "a much better forum if you really want to address the financial problems of the city," Schwartz added. The city's bondholders and the surrounding county of Dauphin have sued Harrisburg to seek a ruling that all tax revenue be directed first to bond payments. The city said it cannot make such payments and still provide for the health and safety of its residents.
http://www.reuters.com/article/20...-bankruptcy-idUSN1E79B0DS20111012

catherineowen

Thank you for providing an interesting topic here. In 1980, brand new rules for municipal bankruptcy were submitted. Since then, 243 specific cities have filed for the security. Harrisburg PA started filing for bankruptcy protection this week. In the courtroom, the mayor of Harrisburg has filed a demand that the bankruptcy be declared unlawful. The fight over the filing is sure to continue for at least a couple weeks. You better check this out: Harrisburg Mayor says bankruptcy filing is not legal. Moreover, by filing for bankruptcy, the city is effectively turning the entire mess over to the courts. When a judge decides the fate of the bankruptcy case, the judge will also effectively be deciding who has standing to make financial and debt decisions for and about the City of Harrisburg.

BornAgain2

Harrisburg, Pennsylvania, Set to Default on $5.27 Million GO Bond Payments
9 March 2012, by Romy Varghese (Bloomberg)
http://www.bloomberg.com/news/201...-27-million-go-bond-payments.html

Excerpt:

Harrisburg (9661MF), Pennsylvania’s insolvent capital, says it will miss general-obligation bond payments for the first time next week as its receiver seeks approval for a plan to sell assets.

The city, carrying a debt load of more than five times its general-fund budget, will miss $5.27 million in bond payments due March 15 on $51.5 million of bonds issued in 1997, according to a notice its receiver posted on the Electronic Municipal Market Access system, a database for filings by debt issuers.

The default is the latest for the $3.7 trillion municipal market, which has seen the number grow while remaining rare. The rate of U.S. municipal-bond defaults doubled to 5.5 a year in 2010 and 2011, from 2.7 in the previous 39 years, Moody’s Investors Service said this week in a report. Stockton, California, last month voted to default on some of its bonds.

“It’s a worrisome trend if it becomes more commonplace” for communities to expect bond insurers to pick up debt payments, said Alan Schankel, director of fixed-income research at Janney Montgomery Scott LLC in Philadelphia. Municipal issuers may become increasingly willing to default even if there is no insurance for bondholders, he said.

“If it’s OK to hurt the bond insurer, is it OK to hurt bond holders?” Schankel said.

zenne0105

Harrisburg is not the only municipality that is having a hard time establishing its financial stability. In fact, over the past month, three California towns have filed for bankruptcy. First it was Stockton, then the resort town of Mammoth Lakes. On July 10, San Bernardino also took the plunge.

Billionaire super-investor Warren Buffett said July 16 that the recent bankruptcy filings of three California municipalities could create a climate where cities would more easily consider Chapter 9 as an option for alleviating debt woes. More information at: Buffett says more cities to file Chapter 9.

BornAgain2

http://news.yahoo.com/bankrupt-sa...er-california-city-182825961.html

Bankrupt San Bernardino hires new manager for California city

2/16/13

LOS ANGELES (Reuters) - Crisis-hit San Bernardino, California, picked a new city manager on Friday at a critical time in its quest to get bankruptcy protection from a federal court.

San Bernardino was forced to look for a new city manager after its acting city manager, Andrea Travis-Miller, quit.

Her resignation coincides with the departure of the city's finance chief. Both had been the key officials overseeing the city's bankruptcy application and their departures threaten the city's ability to achieve it. They had more knowledge than anybody else of the city's finances and the experience to answer questions from the court and creditors.

The city council voted to hire Allen Parker to replace Travis Miller. According to his resume provided to the city, Parker has been an economic development consultant since 2006.

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