The city of Harrisburg, Pa., can continue pressing legal claims that lawyers and bankers misled city officials into backing a $360 million incinerator project that wrecked the state capital’s finances, a Pennsylvania court said, WSJ Pro Bankruptcy reported. The Commonwealth Court of Pennsylvania on Thursday declined to dismiss the city’s lawsuit alleging that a working group of legal and financial advisers provided false information to get Harrisburg’s financial support for the ill-fated waste-to-energy project. Starting in 2003, Harrisburg pledged its taxing power to guarantee municipal debt sold to retrofit the incinerator, the revenue from which was supposed to repay bondholders. When revenue from the incinerator fell short, responsibility for the debt payments fell to Harrisburg, plunging the city of nearly 50,000 into insolvency. Harrisburg avoided defaulting on its general obligation bonds in 2010 only because the state stepped in with aid. State and city officials in 2018 sued underwriter RBC Capital Markets, financial adviser Public Financial Management Inc. and three law firms, alleging they made misrepresentations to get Harrisburg’s signoff. The professionals’ compensation was largely contingent on securing the city’s debt guarantee, which drove them to provide false information and conceal material facts about the project, according to the complaint.
