Friday, January 21, 2011

Legal work to be had

For all who like to tell me that municipalities can't ever go bankrupt in Pennsylvania, an interesting press release out from law firm Pepper Hamilton:  20 Municipalities in Pennsylvania Listed as “Financially Distressed” by Government Agency, Says Pepper Hamilton, Law Firm That Led State’s First Successful Municipal Bankruptcy Reorganization .

Sure sounds like they are carving out a niche for legal work and sure do mention federal (Chapter 9 bankruptcy) a lot.. even touting they did the work for a Pennsylvania municipality (Westfall township) to go through bankruptcy last year. 

It also mentions that states are prohibited themselves from filing for bankruptcy.  True enough, but that can't prohibit them from defaulting on debt.  Pennsylvania itself technically defaulted on a lot of debt in I believe the 1840's.  Wilkes-Barre failed to make bond payments in 2002 and today we have the ongoing imbroglio in Harrisburg.    I was just checking the date of the Pennsylvania bond default and even came across this recent BLAWG post from a PA lawyer all about that history: “Van Buren to Pennsylvania: Drop Dead” which is a great title.

So there is money to be made even, or especially, in bankruptcy.  Lawyers always have the angle. 


Blogger rich10e said...

Every time i've mentioned municipal bankruptcy on a Pgh blog since 2004, people go "U R out of your mind!!!"
Couple more years the way things are going, we'll be fighting over which law firms can offer the best deals!!!

Sunday, January 23, 2011 12:46:00 AM  
Anonymous BrianTH said...

It isn't that PA munis can't conceivably use Chapter 9. It is that they will need the state's permission to do so, and the state can attach conditions and limits on what they can do in a reorg.

The linked article confirms this, and explains why under current state law it is unlikely Pittsburgh could make it to Chapter 9. Note also that all this interaction with the state just makes more work for the lawyers.

Sunday, January 23, 2011 6:23:00 AM  

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