On November 23, 2011, the Bankruptcy Court for
the Middle District of Pennsylvania dismissed Harrisburg,
Pennsylvania's Chapter 9 bankruptcy petition because, shortly
before the filing, the state legislature expressly prohibited
Harrisburg from seeking relief under Chapter 9.
Harrisburg's failed attempt to remain in Chapter 9 highlights
the political factors and state law constraints that
municipalities must consider prior to seeking bankruptcy
relief. This article will discuss the origins of Harrisburg's
debt crisis, the Harrisburg City Council's attempt to file for
Chapter 9 without the Mayor's approval, the legal obstacles
placed in the path of the City Council's bankruptcy filing,
and the lessons that other distressed municipalities and
creditors can learn from Harrisburg's
experience.
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