UPDATE 3-Harrisburg vs Pennsylvania set for court on Monday
* Harrisburg mayor seeks dismissal of bankruptcy filing
* Court orders emergency hearing on Monday
* Pennsylvania also objects, says prohibited by state law
*
(Adds comments from city attorney paragraphs 8-9, 11-13;
outside comment paragraph 14)
By Tom Hals
Oct 14 (Reuters) - Pennsylvania blasted Harrisburg's
bankruptcy filing as "brazenly" disregarding state law and the
mayor won a day in court Monday in her bid to throw out the
City Council's decision to seek bankruptcy protection.
The Pennsylvania state capital's smoldering debt crisis
spiraled into a battle for political control after Harrisburg
filed for Chapter 9 bankruptcy following a 4-3 vote by the City
Council on Tuesday.
The state on Friday objected to the move in a court
filing, joining the mayor, the county and bondholders in
opposition. It called for a "quick end to this ill-advised and
transparent gambit" designed to send a message to creditors.
The mayor also asserted the bankruptcy petition was
invalid because the City Council did not follow proper
procedure.
The bankruptcy court granted the mayor's request for an
emergency conference at 9:30 a.m. EDT on Monday to address the
legality of the filing.
Harrisburg's crisis has been a year in the making. The
city of about 50,000 is hampered by $300 million in debt
incurred from an expensive revamp of its incinerator and is
struggling to fund key city services.
Pennsylvania's governor, Tom Corbett, has said the city
would be better off if it agreed to a rescue plan under a
state program for distressed cities, which has seen
Philadelphia and other cities through crises.
Mark Schwartz, an attorney for the City Council told
Reuters on Friday that Philadelphia and other struggling cities
operate under state oversight. Yet next week the state senate
is poised to vote on a bill that would take that further and
see the state take over Harrisburg.
"It's all about control," said Schwartz. "That's in part
why I filed so quickly."
Pennsylvania argued in court papers that the city was
making a "frontal attack" on state law, which was amended this
year to prevent the city from seeking bankruptcy protection
until July 1, 2012. The governor's office did not immediately
return a call for comment.
Schwartz said the amended statute "falls on its face," and
even if it is upheld it only allows the state to cut off
funding to the city.
Noting that the city is responsible for providing various
services to state government buildings, Schwartz said "I hope
the governor has taken classes in how to use a fire hose."
The bankruptcy court may determine it is not the best venue
for the case if it turns on questions of state law, said one
legal expert.
"I expect the bankruptcy court will decide it does not have
jurisdiction to determine the constitutionality of the
Pennsylvania law and will proceed to dismiss the Chapter 9
filing," Slate Dabney, an attorney with King & Spalding LLP,
who is not involved with the case.
(Reporting by Chip Barnett, David Gaffen and Edith Honan in
New York, Tom Hals in Wilmington, Delaware, and Jessica Hall in Harrisburg;
Editing by Edward Tobin, Leslie Adler, Jan Paschal and Diane Craft)
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