Harrisburg, Penn., loses bid to restart bankruptcy

May 15 (Reuters) - A federal appeals court on Tuesday rejected a request by the City Council of Harrisburg, Pennsylvania, to overturn a decision last year barring the financially battered capital city from seeking bankruptcy protection.

The order from the U.S. Third Circuit Court of Appeals leaves intact a Nov. 23 ruling by Pennsylvania bankruptcy Judge Mary France, who threw out a petition for Chapter 9 bankruptcy protection by the debt-laden city of Harrisburg.

Some members of the Harrisburg City Council said the bankruptcy would preserve the city's assets and fend off creditors who are demanding more than $317 million in payments for the repair and retrofit of the city's trash incinerator.

The City Council can seek a re-hearing on the appeal, and it could also potentially file a new bankruptcy after June 30 if it can win the mayor's approval.

The state, Harrisburg Mayor Linda Thompson, and Dauphin County, in which Harrisburg is located and is one of the city's creditors, had asked the court to throw out the appeal.

They also had asked the appeals court to award damages, claiming the litigation was frivolous, but that request was denied. (Editing by Hilary Russ and Leslie Adler)