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BROKE Penn. Capital Files for Bankruptcy

Penn. Capital Files for Bankruptcy

Pennsylvania’s capital city, Harrisburg, filed for bankruptcy Tuesday—a move that surprised county commissioners, who plan to challenge the legality of such a proceeding. Harrisburg’s city council voted 4-3 to file the rare Chapter 9 motion—bankruptcy for municipalities—but already the county commissioners for the area and Harrisburg's mayor say the motion is illegal without the state’s permission. Harrisburg has listed debts of more than $400 million, $310 million of which comes from a failed incinerator project. The filing came just one week before the Pennsylvania House was set to consider a bill that would allow the state government to take over Harrisburg’s finances. While several other municipalities have filed for Chapter 9 in recent years, Harrisburg’s is one of the most high-profile and many wonder if this could be the start of a trend.

October 12, 2011 10:25 PM