The biggest bondholder of the bankrupt Pennsylvania city of Chester is scheduled to appear in court on Monday to argue that the city’s chapter 9 bankruptcy petition is invalid and should be dismissed, WSJ Pro Bankruptcy reported. Preston Hollow Community Capital LLC, which holds municipal bonds issued by Chester in 2017 with the initial principal amount of $19.2 million, has argued that the city failed to engage in the good-faith negotiations required before a municipality can access the protections of chapter 9 bankruptcy. Once a thriving industrial and manufacturing hub near Philadelphia, Chester filed for bankruptcy in November after facing financial challenges in recent years. The unsecured bonds held by Preston Hollow make up a fraction of the city’s overall obligations, notably mounting pension obligations that include at least $127.2 million in back payments. Recognizing Chester’s financial distress, Preston Hollow approached the city in June 2022 to discuss its proposal for the city to pay down the bonds using a portion of the $30.4 million in federal assistance that it received under the COVID-19 stimulus package. The firm’s proposal would have reduced the city’s debt service obligations by more than $900,000 in the fiscal year 2023, according to court papers filed by Preston Hollow managing director Charles Visconsi. He said the city’s receiver, Michael Doweary, didn’t engage in negotiations and just said he would contact the firm “in the coming weeks.”
