Westfall Township keeping bankruptcy option open

By JOE McDONALD
Pocono Record Writer
jmcdonald@poconorecord.com

WESTFALL — Bankruptcy may be looming for a small Pike County township.

In the wake of last month's $10.1 million award against Westfall Township officials, the supervisors Tuesday night hired a Philadelphia law firm to "take all actions reasonably necessary'' to protect the township from the jury verdict won by two New Jersey developers in federal court in Scranton.

The supervisors agreed to pay a $15,000 retainer fee to the law firm of Lavin, Coleman, O'Neil, Ricci, Finarelli & Gray with the understanding it will file a Chapter 9 bankruptcy petition if that becomes necessary.

As of Friday, attorney Robert Szwajkos said the township had not filed for bankruptcy. Szwajkos is working as a "special solicitor'' to the township at $250 an hour, according to the motion approved at Tuesday night's meeting.

Chapter 9 bankruptcies are rare. They provide protection for financially distressed municipalities from creditors while they develop a plan for adjusting their debts.

The township is keeping its bankruptcy option open while waiting to see how U.S. District Judge James Munley rules on a series of post trial motions. The deadline for those motions is Monday, Szwajkos said.

If Munley lets the verdict stand, the township is expected to appeal to the U.S. Third Circuit Court of Appeals in Philadelphia.

The township, which has a population of less than 3,000, found itself on the hook for millions of dollars after the eight-week trial ended with a verdict in favor of developers from New Jersey who claimed the township conspired to prevent them from developing some 730 acres.

The developer, David Katz of Sparta, and his partner, Daniel M. Collins, had planned to subdivide the property into a development to be called Rosetown Estates.

The jury found the township liable for $2.8 million; two of its supervisors, John Hess and Richard Maggs, liable for $1.5 million; the late Colleen Hakun, the former township secretary and zoning officer, liable for $2.3 million, and solicitor John Stieh liable for $3.1 million.

As in all bankruptcy petitions, such as those filed by businesses and individuals who are over their heads in debt, a Chapter 9 filing by the township would automatically stay the collection of debts.

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