Chapter 9 Bankruptcy, Bankrupt City | featured news

Pennsylvania’s financially distressed capital city is seeking Chapter 9 bankruptcy, citing overwhelming debt, but Harrisburg’s mayor and top city lawyer said the filing signed by a City Council member was not legal. The petition docketed by U.S. Middle District bankruptcy court Wednesday listed about $458 million in creditors and claims, and said the city faced “imminent jeopardy” from six pending legal actions by creditors related to a debt-saddled trash incinerator.

The economic slump is forcing debt-laden cities and towns to consider using Chapter 9. The bankruptcy option is causing experts to worry about the safety of municipal debt.