Pennsylvania Act 1935-146 — MUNICIPAL DEBTS, READJUSTMENT

Act text

MUNICIPAL DEBTS, READJUSTMENT
                 Act of Jun. 11, 1935, P.L. 323, No. 146              Cl. 53
                                  AN ACT

     Designating the Department of Internal Affairs as the agency of
        the Commonwealth to approve or disapprove petitions to
        courts, and plans for the readjustment of debts of political
        subdivisions, under the act of Congress relating to the
        bankruptcy of political subdivisions; and defining the powers
        and duties of said department in relation thereto.

        Section 1.  Be it enacted, &c., That no political subdivision
     of this Commonwealth shall file any petition in any district
     court of the United States under the Municipal Bankruptcy Act,
     adopted by the Congress of the United States, approved the
     twenty-fourth day of May, one thousand nine hundred and thirty-
     four, Public Act Number two hundred fifty-one, Seventy-third
     Congress, entitled "An act to amend an act, entitled 'An act to
     establish a uniform system of bankruptcy throughout the United
     States,' approved the first day of July, one thousand eight
     hundred and ninety-eight, and acts amendatory thereof, and
     supplementary thereto," alleging that it is insolvent or unable
     to meet its debts as they mature, and expressing its desire to
     effect a plan of readjustment of its debts, unless such petition
     has first been submitted to, and the filing thereof has been
     first approved, in writing, by the State Department of Internal
     Affairs. Said department is hereby designated, in accordance
     with said act of Congress, as the agency of the Commonwealth of
     Pennsylvania which shall have power to approve or disapprove the
     filing of any such petition of a political subdivision, and to
     approve or disapprove any plan of readjustment of the debts of
     any such political subdivision, prepared, filed, and submitted
     with the petition to the court, as provided in said act of the
     Congress.
        Section 2.  When any such petition shall be submitted to the
     Department of Internal Affairs for approval, accompanied with a
     proposed plan of readjustment of the debts of a political
     subdivision, the department shall make a careful and thorough
     investigation of the financial condition of such political
     subdivision, of its assets and liabilities, of its sinking fund,
     and whether the affairs thereof are managed in a careful,
     prudent, and economic manner in order to ascertain whether the
     presentation of such petition is justified, or represents an
     unjust attempt by such political subdivision to evade payment of
     some of its contractural obligations, and, if the department
     believes that such petition should be approved, whether the plan
     of readjustment submitted, will be helpful to the financial
     condition of the political subdivision, and is feasible, and at
     the same time fair and equitable to all creditors.
        The Department of Internal Affairs shall also, prior to
     giving its approval, ascertain the amount, if any, of the
     obligations of any such petitioning political subdivision which
     is held by any agency or agencies of the State government as
     trust funds, and shall, before approving any such petition and
     plan of readjustment, consult with and give every such agency an
     opportunity to be heard and the privilege to examine the
     findings of the department resulting from the investigation
     hereinbefore required to be made, and shall likewise hear any
     other creditor of such political subdivision, whether resident
     within or without this Commonwealth, who shall apply therefor.
        The department, if its approves a petition, shall, before
     giving its approval, require such modification in the proposed
     plans for readjusting the debts as to it appears proper.
        Section 3.  This act shall become effective immediately upon
     its final enactment.