The city of Chester, Pa., can proceed to restructure in bankruptcy despite objections from its own elected officials and its biggest bondholder, a bankruptcy judge ruled, WSJ Pro Bankruptcy reported. The city “satisfies all the statutory requirements” as a municipality to restructure under chapter 9 bankruptcy, Judge Ashely Chan of the U.S. Bankruptcy Court in Philadelphia said in a written opinion on Tuesday. Chester’s filing in November marked the largest U.S. municipal bankruptcy since the 2017 filing by Puerto Rico. The city has struggled to keep up with its debt payments, including to Preston Hollow Community Capital LLC, which holds $19.2 million of the city’s 2017 municipal bonds. Preston Hollow objected to the city’s chapter 9 eligibility, arguing that the city failed to engage in the good-faith negotiations with creditors required by the bankruptcy code. On Tuesday Judge Chan disagreed, saying the record shows the city made efforts to negotiate with its major creditors, including its three unions and Preston Hollow, before filing for bankruptcy. Chester’s mayor and city council members also questioned the validity of the bankruptcy petition, asserting that the filing wasn’t voluntary because the city’s elected officials “did not authorize” it.
