Harrisburg Files for Bankruptcy on Overdue Incinerator Debt
By Michael Bathon, Romy Varghese and Linda Sandler – Oct 12, 2011 10:43 AM ET
Harrisburg, Pennsylvania, filed for bankruptcy in U.S. court in Harrisburg, after failing to pay the debt due on a city incinerator.
The city’s bondholders include Ambac Financial Group Inc., with more than $70 million of revenue bonds, and Covanta Holding Corp., with about $120 million of bonds and advances of funds to Harrisburg. The bankruptcy petition listed both assets and debt of between $100 million and $500 million.
The city of 49,500, capital of Pennsylvania, faces a debt burden five times its general-fund budget because of an overhaul and expansion of a trash-to-energy incinerator that doesn’t generate enough revenue. Its total guaranteed debt is about $242 million, with $65 million of it overdue, according to the petition.
“The city meets the ‘generally not paying’ definition of insolvency, because it has repeatedly failed to pay the guaranteed incinerator bond debt as it has become due,” Harrisburg said in the filing. “Under the guarantees the city would need to cover a combined $83 million of past due payments and the 2011 debt service.”
The case is In Re: City of Harrisburg, 11-06938, U.S. Bankruptcy Court, Middle District of Pennsylvania (Harrisburg.)
To contact the reporters on this story: Michael Bathon in Wilmington, Delaware, at firstname.lastname@example.org. Romy Varghese in Philadelphia at email@example.com; Linda Sandler in New York at firstname.lastname@example.org
To contact the editor responsible for this story: John Pickering at email@example.com