June 26 Covanta Energy Corp has reached a
tentative settlement with the receiver for the cash-strapped
city of Harrisburg, Pennsylvania, in a lawsuit that threatened
to upend the city's recovery plan.
The company said in an email to Reuters on Wednesday that it
agreed in principle on a settlement with the city and other
stakeholders. The deal was aired during a court hearing on
Monday. Covanta Energy is a subsidiary of Covanta Holding Corp.
Harrisburg is now at least $340 million in debt - some
reports put the figure at $370 million - thanks largely to the
municipal bonds it guaranteed to finance upgrades to its
waste-to-energy trash incinerator.
The roots of the lawsuit stretch back to 2007, when the city
hired Covanta to complete the incinerator upgrades. As part of
that contract, Covanta agreed to advance nearly $22 million to
the Harrisburg Authority, which must be repaid.
The city had guaranteed the authority's obligations. Covanta
sued in 2010 when it did not receive repayment from the city.
Harrisburg's state-appointed receiver, William Lynch, is
overseeing a recovery plan for Pennsylvania's distressed capital
city, including the sale of the incinerator and other city
Lynch had said that a recent move by Covanta to win judgment
in its 2010 lawsuit could push the city into bankruptcy by
moving Covanta ahead of other creditors and disrupting
out-of-court negotiations to resolve the city's debt problem.
Lynch does not dispute that the city so far owes $1.9
million. But he said in a recent court document that with its
bid to win judgment in the lawsuit, Covanta was "attempting to
move to the front of the line" of creditors.
A spokesman for Lynch did not immediately return a call
seeking comment. Covanta would not provide details of the
settlement, which has yet to be finalized in writing with the
Dauphin County Court of Common Pleas.