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What it Means When a Municipality Files Chapter 9 Bankruptcy

Chaaron Pearson on Tuesday, December 6, 2011 at 12:00:00 am

In the wake of Pennsylvania’s capital, Harrisburg, and Alabama’s largest county, Jefferson County, declaring bankruptcy, other communities may be looking to Chapter 9 bankruptcy to restructure debt.

Chapter 9 is the portion of the federal bankruptcy code that allows municipalities to seek court protection in the event of fiscal crisis. It is meant to ensure that basic government functions continue while policy makers restructure their debt. Only municipalities, not states, can file for Chapter 9. Municipal bankruptcies are very rare. Only about 620 municipalities have filed for bankruptcy since 1937 when Chapter 9 was added to the federal bankruptcy code. For more information on what happens after Chapter 9 is filed, how long Chapter 9 cases take and what changes a Chapter 9 filing brings to day-to-day life, visit Stateline.org’s article Municipal bankruptcy explained: What it means to file for Chapter 9.

Chambers Getting Involved

Eleven Pennsylvania chambers have joined together with other stakeholders to form Metro Chambers for Sustainable Cities. These chambers include Greater Reading, Harrisburg Regional, Lancaster, Greater Lehigh Valley, Greater Pittsburgh, Greater Wilkes-Barre, Monroeville Area, Williamsbport/Lycoming, York County, Allegheny Valley and Mon Valley Progress Council. The chambers are looking to make a difference in the future sustainability of their cities and to promote the success of their cities in Pennsylvania. The chambers decided to get involved because the business community regularly thinks regionally and long term, and chambers are skilled at advocacy on behalf of business. They believe: A Prosperous City = A Prosperous Economy = A Successful Business Climate

Other Sources:
Largest municipal bankruptcy ever prompts muted reaction elsewhere
Harrisburg bankruptcy sets up fight with state
Alabama’s Jefferson County enters biggest muni bankruptcy as crisis victim

Tags: Municipal Issues, Bankruptcy, Chamber Coalitions

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