When is it advantageous to hire an inexperienced bankruptcy attorney to handle local government bankruptcy finances? Harrisburg, Pennsylvania, the capital city of a US state, demonstrated that this is feasible. When complex political issues are involved in city bankruptcy cases, it is best to hire an attorney who is well-versed in area politics rather than the intricacies of bankruptcy law. Politicians are tough when it comes to saving their necks for the next election and therefore it is not worth asking them to sacrifice their future just to settle an ongoing city bankruptcy case. Politicians are very results oriented like any other businessman and therefore it is essential to point them to the probability of achievement rather than designing actions that antagonize voters.
The Harrisburg City Council retained Cravath, one of the largest law firms in the United States, to represent them in bankruptcy proceedings. Soon after, the City Council dropped Cravath and turned to Atty instead. Mark Schwartz, a one-man law firm in Bryn Mawr, Pennsylvania. Atti. Mark Schwartz worked as a legislative assistant in the Pennsylvania House of Representatives, serving on the House Rules Committee. There he acquired a lot of experience in legislative haggling and maneuvering on sensitive issues such as municipal restructuring.
Several major law firms retain attorneys with experience in municipal restructuring. Atti. Levin, who worked in Cravath, was a staff member of the House Judiciary Committee, and was involved in drafting the Pennsylvania Bankruptcy Code of 1978. He represented the city of Gardena, California, and the Pennsylvania Off-Track Gambling Corporation. New York City, and several small towns undergoing financial restructuring. However, there are large law firms specialized in municipal bankruptcy proceedings. One of them is Klee Tuchin Bogdanoff & Stern, led by Atty. Kenneth Klee. The law firm successfully represented Jefferson County, Alabama in navigating a financial crisis that began in January of this year. Another firm is Chapman and Cutler and Associates, led by Esq. James Spiotto. He successfully negotiated a bankruptcy case involving bondholders in the Sierra Kings Health Care District municipal restructuring case in the bustling state of California in 2009.
Chapter 9 of the Pennsylvania Bankruptcy Code of 1978 is too rare a case to classify as a separate specialization for attorneys. Atti. Bruce Bennett, an associate at the law firm Dewey & LeBoeuf, said there are very few cases involving municipal structuring and bankruptcy covered by Chapter 9. Only 630 cases covered Chapter 9 bankruptcy compared to 13,000 cases. filed under Chapter 9. Chapter 11.
There is plenty of work available for financial advisers and bankruptcy consultants when municipalities are in deep financial trouble. Novak Consulting Group, founded in 2009, was organized for this purpose. He helped shape a rescue plan for Harrisburg that was unfortunately rejected by the City Council. Another is the Alvarez & Marsal law firm which was involved in the famous Lehman Brothers bankruptcy case in 2008. The Harrisburg municipality turned to this law firm after its City Council rejected its bankruptcy and restructuring proposal.
Many cities facing bankruptcy proceedings are hesitant to seek professional help from legal advisors who can help them. This has always been the case with private companies dealing with government offices. Perhaps political issues are too complicated for private companies to handle. While many feel it is time for the most competent private bankruptcy law firms to take on government agencies, the resistance is coming from government agencies. They may not want to get involved in tedious controversies or conflict of interest cases.
