Harrisburg Council decides to appeal bankruptcy ruling: lawyer

HARRISBURG, Pa Sun Dec 11, 2011 1:30pm EST

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HARRISBURG, Pa (Reuters) - Harrisburg's city council has decided to appeal a federal court judge's decision to deny its entry into municipal bankruptcy court, a lawyer representing the council said.

Middle District Judge Mary France ruled last month that the city could not pursue Chapter 9 bankruptcy proceedings because a law that was changed over the summer revoked the city's authority to file for the protection.

Harrisburg is more than $315 million in debt, mostly from an expensive revamp of its incinerator, and the burden has forced the city to make cuts to key services. It has also forced it to decide to sell the incinerator and lease several parking garages to help pay debts.

Soon after France's rejection of the bankruptcy court petition, the state petitioned another court to approve the man it wants to lead Harrisburg out of its money crisis. Commonwealth Court approved David Unkovic's selection as receiver on December 2.

It was unclear if Harrisburg City Council's appeal of the bankruptcy court decision might affect the state's takeover of the capital. Unkovic has already met with stakeholders and city officials in an attempt to get a better understanding of the city's debt burden.

The attorney representing the majority of Harrisburg City Council members who narrowly approved the original bankruptcy petition, said considerable thought was given to the Saturday decision to appeal.

"As I have said, with all due respect, I feel that the decision was in error. Moreover, this is a case that could very well end up in the U.S. Supreme Court," Attorney Mark Schwartz said in an e-mail.

Schwartz submitted a statement of election to have the council's appeal heard by the U.S. District Court for the Middle District of Pennsylvania.

(Editing by Cynthia Johnston)

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