Monday, October 17, 2011
Jefferson County, AL Veering Away from Bankruptcy Settlement
There is still a possibility that Jefferson County, Alabama will be filing the largest municipal bankruptcy in history.
In September, county commissioners and debt holders reached an agreement, but the terms of the agreement depend on the passage of various state laws, including sewer rate increases. Some legislators have expressed opposition to the settlement. A legislative session has yet to be scheduled and the city is again facing an ominous Chapter 9 bankruptcy.
The county has been struggling since 2008 due to a $3 billion sewer debt. Also, 44 percent of the county’s discretionary revenue stemmed from an occupational tax, which was found to be unconstitutional by the state Supreme Court. The county laid off hundreds of employees as a result of the finding.
If Jefferson County does file for bankruptcy, it will be a historical amount topping the record $1.6 billion of debt that led to Orange County, California’s Chapter 9 filing in 1994.
The fate of the laws that are part of Jefferson County’s settlement now lay in the hands of state legislators.
A growing number of municipalities are facing bankruptcy. To learn more, please contact an experienced bankruptcy lawyer in your area.
Wednesday, October 12, 2011
Harrisburg, PA Files for Chapter 9 Bankruptcy
In a somewhat divisive move, the Harrisburg City Council voted 4-3 to file for Chapter 9 bankruptcy.
Harrisburg is the capital of Pennsylvania, and is currently attempting to file for Chapter 9 bankruptcy, the chapter specifically created for municipalities. Chapter 9 provides protection from creditors while the municipality reorganizes its debts.
Mayor Linda Thomson and the state are opposed to the bankruptcy filing, wishing instead to create and implement a fiscal rescue plan. The state is serious enough in its opposition to attempt to take control of Harrisburg. The state house has passed a bill that would allow the state to take control of Harrisburg and establish a fiscal rescue plan. Next week, the state senate will decide whether to pass the bill.
A primary reason that Harrisburg has become so indebted is the city’s trash incinerator facility, a project that cost almost $300 million. The incinerator has not brought in the revenue it was expected to.
Unfortunately, Harrisburg is one of many recent Chapter 9 bankruptcies. The city joins other municipalities including Central Falls, Rhode Island. Some economists and financial analysts are predicting that more will follow.
To learn more about bankruptcy, please contact an experienced bankruptcy attorney in your area.