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Westfall Township, PA - Town Goes Bankrupt After Developer Wins $20M Judgment

Published on: April 19, 2009 09:47 AM
By: Record
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Westfall Township, PA — The township has filed for bankruptcy protection because of a $20 million judgment a federal judge ordered the municipality to pay a New Jersey developer.

The township filed under Chapter 9, a rarely used section of the bankruptcy code that pertains to municipalities. Westfall is the only municipality in Pennsylvania to have filed Chapter 9 bankruptcy in living memory, officials said.

Jake Buchanan, vice chairman of the township’s board of supervisors, said there was no way Westfall could pay the multimillion-dollar judgment. The township’s annual budget is about $1 million, and it serves 2,430 people.

The bankruptcy filing means the township is protected from having to reduce services or sell off assets. Westfall will have trouble finding credit, but the township already operates on a cash basis, Buchanan said. If not for the judgment, the town would be in good financial shape, he added.

The township plans to restructure the debt in a series of hearings. It is likely a portion of the judgment will be voided, but taxpayers will be on the hook for whatever percentage the court decides the township should pay, Buchanan said.

Westfall’s legal battles with developer David Katz have gone on for 23 years. Nobody who was in town government when the lawsuits began is in office anymore.

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The litigation was over 750 acres of wooded property off Old Milford Road and Mountain Avenue that Katz bought in 1985 in hopes of building homes there. His development plan sparked a series of arguments over zoning and water and sewer lines.

“In the end, they will still have to pay,” Katz said Friday.

Katz also said he had offered to negotiate payments with the town after the court judgment. Buchanan said no further negotiations are possible.

Though it is not common for a government entity to declare bankruptcy, it is not unprecedented. Orange County, Calif., declared bankruptcy in 1994 after losing $1.7 billion in taxpayer money on risky Wall Street investments.



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Read Comments (3)  —  Post Yours »

1

 Apr 19, 2009 at 09:52 AM boroparker Says:

vezoy kimped the katz iber the vaser?

3

 Apr 19, 2009 at 09:29 AM developer Says:

without knowing the particulars of the case, all i can say is this article should be sent to every municipality that fights with developers. let them know that every time they hold up a developer they may have to pay a big price for their actions.

alot of towns try to stop development for no reason and make people lose their entire life savings because they have a government position that gives them the right.

too bad he didn't get a judgement against the officials that were in office in 1985

4

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