“Wall Street can sell any piece of garbage, which brought us to where we are today. The prevailing attitude has been, 'Give us enough juice for a broker, and we’ll sell it,’ ” he said. Assured Guaranty earlier this month rejected a request by the city to forgive $100 million worth of debt. And last week, Covanta, which issued a loan to the city to finish the incinerator project, blamed “the financial mismanagement of the city and the Harrisburg Authority” in a memo to employees from Paul Gilman, the company’s chief sustainability officer. The original engineering firm on the incinerator refit, Barlow Projects Inc. of Fort Collins, Colo., filed for bankruptcy in 2007. “The current situation in Harrisburg remains very uncertain and any potential outcome is unclear at this time. We will be supportive of any outcome or plan that is good for the city and good for our company,” said Gilman, who released the memo to the media. Ambac is the insurer for Harrisburg’s general obligation bonds, on which the city is current with payments. Harrisburg avoided a GO default in September by raising money through a 10-year lease extension with the parking authority, which sold taxable debt at a 10.75% coupon to make the up-front lease payment to the city. Brandt said Pennsylvania fears the domino effect of Chapter 9 filings, should France uphold Harrisburg’s request. “If I’m Pennsylvania, I don’t want to let it happen because a line will form outside the door. The state would lose control. If they let it fly and it happens 'just this once,’ it won’t be just this once,” he said. France will operate in her home court, where she is chief judge. Theodore McKee, chief judge for the U.S. Court of Appeals for the Third Circuit, appointed her. “She is a real smart lady. She has the right skills fit to do this, and the temperament as well,” Brandt said. “The chief judge could have assigned the case to any judge, from Pennsylvania, New Jersey, Delaware. … That he chose Judge France shows a lot of faith in her ability because this is a big Chapter 9 case,” said Juliet Moringiello, a professor at Widener University’s law school in Harrisburg. France has appeared at Moringiello’s classes, often performing roleplaying legal exercises with students. “I have read a lot of her written opinions and they strike me as well thought out,” she said. “This is a big case over whether Harrisburg has the authority to file for bankruptcy under state law and who can act on behalf of the city. There are a few issues to be settled and she will consider everything carefully.”
2011 Media Report Villanova School of Business Page 226