Tags: PA | Harrisburg | Financial | Woes

Financially Troubled Pa. Capital Sued Over Debt

Tuesday, 14 Sep 2010 08:28 AM

Pennsylvania's financially troubled capital city is being sued over the massive debt on its trash incinerator that threatens to drag it into bankruptcy even as city leaders say they are trying to negotiate a way to repay it.

Financial firms in charge of administering and insuring the debt filed the lawsuits Monday. They came a day after Gov. Ed Rendell said he was speeding up payments, including pension aid, to ensure Harrisburg has enough cash to make a $3.3 million installment payment Wednesday on unrelated general obligation debt.

A spokesman for Mayor Linda Thompson said administration officials had not seen the suits, but described them as unnecessary given the city's commitment to meeting its obligations.

"We certainly think that any such action is both premature and doesn't solve the problem," spokesman Chuck Ardo said. "It requires the city to expend valuable resources to defend itself without producing a single dime that actually solves the problem."

Toronto-based TD Bank N.A., a trustee responsible for distributing payments to bondholders, filed one suit in Dauphin County court seeking payment of nearly $35 million. The money is due to bondholders on Dec. 15, but was not forwarded to TD Bank last month as was required, the suit said.

A second trustee, M&T Bank Corp., of Buffalo, N.Y., and bond insurer, Assured Guaranty Municipal Corp. of New York, filed a separate suit to recoup millions in missed debt payments, and to ask the court to appoint a receiver to run the incinerator.

Neither the city authority that owns the incinerator nor the city, which has backed all the $288 million in debt on the facility, has the money to make the regular installment payments.

Some city council members and the city's controller recently have suggested the Susquehanna River city of 47,000 should take the rare step of seeking bankruptcy protection as a tactic to force concessions from the lenders.

However, Thompson opposes such a step. A central component of any payback plan is likely to involve the long-term lease or sale of city assets, such as parking garages or an island in the Susquehanna that is home to a soccer field and a minor league baseball park.

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Pennsylvania's financially troubled capital city is being sued over the massive debt on its trash incinerator that threatens to drag it into bankruptcy even as city leaders say they are trying to negotiate a way to repay it. Financial firms in charge of administering and...
PA,Harrisburg,Financial,Woes
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2010-28-14
 

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