BANKRUPTCY? Hartford Inches CloserMay 10, 2017
The Hartford Courant reported on Tuesday that the capital city is talking to bankruptcy lawyers. Will Connecticut's fourth-largest city go bankrupt?
The Hartford Courant reported on Tuesday that the capital city is talking to bankruptcy lawyers. Will Connecticut’s fourth-largest city go bankrupt?
Hartford is talking to bankruptcy lawyers, according to a report in the Hartford Courant on Tuesday.
Jenna Carlesso reported, and Mayor Luke Bronin (D-Hartford) confirmed, that the city is taking early steps to determine how the bankruptcy process would work.
“We have not engaged bankruptcy counsel, but we have had initial conversations with firms that have experience in Chapter 9 and municipal restructuring,” Bronin said. “Given the uncertainty of the state budget process and the depth of the state budget crisis, it shouldn’t surprise anyone that we might engage counsel in the near future.”
The Courant also noted Hartford’s daunting deficits: $14 million this fiscal year, which ends on September 30, and $65 million next fiscal year, which starts on October 1.
Bronin has tried to lean on city employee unions for concessions but, as Reclaim Connecticut noted on Tuesday, his efforts have fallen well short so far.
Moody’s Investor Services pegged Hartford’s total debt at $568.4 million in October 2016. If Hartford declares bankruptcy, it will be one of the largest U.S. cities in history to do so. Hartford’s bankruptcy, though, would pale in comparison to Detroit’s 2013 filing. Detroit had $18.5 billion in debt at the time.
A question on the minds of many: what happens when Hartford declares bankruptcy? A lot, of course, but a 2012 NPR interview with a former city manager who worked through bankruptcy in Vallejo, California, offers insight:
- Hartford still has to get its “fiscal house in order” and balance budget
- All major “parties” who are owed money by the city get a seat at the table, with a judge presiding
- Hartford would likely have to cut spending and services
- Hartford would likely have to cut employee pay and benefits
- Hartford would have a harder time attracting and retaining businesses
All of these consequences are troubling, but it appears bankruptcy may be closer than ever for the capital city after Tuesday’s news.
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