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Bankruptcy could return to the table in Harrisburg

Written by The Associated Press | Nov 28, 2012 1:20 PM
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(Harrisburg) -- A state law barring its debt-ridden capital city from seeking federal bankruptcy protection is expiring and that prospect could emerge again in talks with creditors.

The bankruptcy prohibition expires Friday.

A spokesman for Harrisburg's state-appointed financial custodian William Lynch has said the power to seek bankruptcy protection gives him a stronger hand in seeking concessions from the city's creditors.

That ban and a state takeover were part of a two-pronged effort by Republican lawmakers from suburban Harrisburg.

They wanted to stop city officials from seeking court approval for a commuter tax or bankruptcy protection to force creditors, including Dauphin County, to assume part of the debt.

A bankruptcy filing by City Council was rejected in court last year because of the state prohibition and the mayor's objections to it.

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