City To Ask Judge To Review His Decision
Sep. 05, 1991
BRIDGEPORT, Conn. (AP) _ A federal judge who rejected the city's bankruptcy petition agreed Wednesday to look at new evidence the city says shows it is insolvent, Bridgeport's lawyers said.
Judge Alan H.W. Shiff denied Bridgeport's petition Aug. 1, saying the city was not insolvent because it had $27 million in cash at the beginning of the fiscal year July 1.
City attorneys told Shiff they were planning to introduce evidence to show that the state was blocking the city's access to the $27 million, City Attorney Barbara Brazzel-Massaro said.
Shiff indicated the evidence could have more far-reaching implications in the case and said he might reconsider his decision, she said. Shiff made his comments during a private meeting in his chambers.
The meeting, which also included Attorney General Richard Blumenthal, was intended to discuss the city's request for a stay of action pending its appeal, she said.
''He's reserving his right to reconsider the decision and he's also asked the state to make a clear demonstration one way or the other of what they intend to do about the $27 million,'' said Richard Zeisler, a private bankruptcy attorney working with the city.
Schiff scheduled a six-hour hearing Sept. 12 for arguments, Brazzel-Massaro said.
The hearing is in addition to an appeal the city filed Tuesday in U.S. Bankruptcy Court in Bridgeport, seeking to overturn Schiff's decision to reject its bankruptcy petition.
Bridgeport's cash position was a key issue in the city's July bankruptcy trial. All but $2 million of Bridgeport's cash was a reserve the city set aside when it issued $58.3 million in deficit bonds in 1989, and much of the testimony revolved around whether the city had access to the reserve.
The city contended it was insolvent partially because it had been blocked from using the money by the Bridgeport Financial Review Board, a state panel that oversees the city's finances.
But State Treasurer Francisco Borges, former chairman of the review board, testified the $25 million was intended to be used to pay the city's operating costs and did not have to be replenished within the fiscal year.
Blumenthal said Wednesday the state has always been clear about Bridgeport's access to the cash.
''The reserve fund can be used only to pay bills as they come due or cover operating deficiencies or shortfalls,'' he said. ''The reserve fund cannot be used to balance the budget, that is to say, balance expenditures and revenues.''