Harrisburg (state capital of Pennsylvania) Bankrupt - Essay Example

HARRISBURG BANKRUPTCY INTRODUCTION As it is said if you owe a bank $100 and cant pay then you are in trouble but if you owe a bank $100 million thenthe bank is in trouble. That is the case with Harrisburg Pennsylvania. Pennsylvania’s financially jeopardized capital; The City Council of Harrisburg went bankrupt on Wednesday which was quite surprising even for the mayor of the state herself, who instantly stated that the filling was illegal under state law. Governor, Tom Corbett is expected to sign a bill this week to take the charge of the state Capital’s financial recovery plan.(1) The filing which is around $400 million is largely due to failed trash incinerator and pulled the city into the pool of financial instability.

SUMMARYThe move took place when the legislature of the state considered implementing the rescue plane. Last year many bankruptcies were expected by the municipal state analysts. However, very few localities dared to take the step. The council took the decision Tuesday night, 11 October 2011, in a 4 to 3 vote .Immediately after a petition was faxed of chapter 9 bankruptcy to the United State Bankruptcy Court by a lawyer of the Council.It all started with an inefficient incinerator which the city owned since 1960s, a political plan in 1990s by the county favored the landfills over the incinerator and by 2003 the enterprise went under $104 million dept.

the situation worsened when an amateurish company was hired to fix it made and the contractor fumbled through the project badly and took the dept $130 million. So the City Council chose to bankrupt rather then state sponsored plan of dealing with the debt.Even as the dispute over the legality of the appeal filed under the Bankruptcy Court continues Lawyers are becoming active to pass legislation précising a state takeover. Lawyer hired by Mayor Linda Thompson argued that the filing violated city and state laws as city law requires the mayor and city solicitor to sign off all the hiring of the outside lawyers and solicitors approval of the rules and resolutions is required that are being considered by the council and neither was done in this case.

Ms Linda Thomson called this whole event an episode of “sneak attack”.(2)Council members like Brad Koplinski, attacked the mayors financial plans and said that state backed plans were already rejected by the council and largely because it demanded too little from the creditors. Because of the mentioned reason Ms. Thompson and Council had been locked in battle for months.Ms Thompson argued that the Council is hindering the path of easing financial distress. STATES DECISIONS:The vote created the confusion among citizens about the bills and Gov.

Tom Corbett said that the city should agree with the rescue plan under state’s program for distressed cities .(3)Pennsylvania’s state House of Representatives have now passed the bill that will cause he forced implementation of the plan and the bill will be signed next week, that will include state’s labor deals as well as putting its valuable assets for sale while City Council still disagree with the plan and consider it shameful and benefiting the creditors at expense of the city.References:1.

http://www.bbc.co.uk/news/world-us-canada-152831482. http://www.nytimes.com/2011/10/13/us/harrisburg-pennsylvania-files-for-bankruptcy.html3. http://online.wsj.com/article/SB10001424052970204479504576637082754651812.html