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Ex-Harrisburg Receiver Must Testify at Replacement’s Hearing

May 21 (Bloomberg) -- The former receiver for Harrisburg, Pennsylvania, who quit, citing “political and ethical crosswinds,” must testify at a hearing on his proposed replacement, a judge ruled today.

Pennsylvania appeals court Judge Bonnie Leadbetter ordered David Unkovic to appear at the May 24 hearing on the man proposed to replace him, William B. Lynch, a retired U.S. Air Force major general.

The decision is a partial victory for Governor Tom Corbett, who appointed Lynch. In the same order, Leadbetter denied a request by opponents of the receivership to halt state control over Harrisburg’s finances until Unkovic testified about why he quit.

Leadbetter also said that Unkovic’s testimony will be “strictly limited to matters relevant to the appointment of Major General William B. Lynch as receiver.”

Unkovic was appointed under a state law that allows a receiver to prepare and implement a fiscal recovery plan.

Elected officials in Harrisburg disagree about the Unkovic’s initial plan to end the insolvent city’s crisis. That plan would be implemented by Lynch, should his appointment be approved by Leadbetter.

Before he resigned, Unkovic proposed selling or leasing city assets, including a trash-to-energy plant that doesn’t generate enough revenue to cover more than $300 million in debt.

The debt is one of the main reasons Harrisburg, the state’s capital, is insolvent. In March, the city of 49,500 announced it would miss $5.27 million in bond payments. It earlier defaulted on payments it guaranteed on the waste-to-energy incinerator.

The receiver case is TD Bank NA v. Harrisburg Authority, 2010-CV-11737, Court of Common Pleas, Dauphin County, Pennsylvania (Harrisburg).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at

To contact the editor responsible for this story: John Pickering at

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