
Something very unusual happened at the federal bankruptcy hearing for Germantown Settlement, a social services and housing non-profit that has been awarded over $100 million dollars over the past 25 years in grant money. Community members, not creditors, debtors, or attorneys had a chance to let their voice be heard in court.
Over a dozen residents came to last Thursday's hearing, where Settlement's plan of reorganization was supposed to be discussed. However, the plan was formally withdrawn just a day before. Irv Ackelsberg, a pro bono lawyer for the community, was the first to speak up.
“Many of us can surmise the day we can say Germantown Settlement is over,” he said. “The people and the institutions and businesses of Germantown have suffered.”
Ackelsberg requested that residents be permitted to be heard and the opportunity to question if another plan is presented by the bankrupt non-profit.
“It’s not a high hurdle given the circumstances, I wouldn’t deny them [residents] the opportunity to be heard,” said Chief Judge Stephen Raslavich.
As a result, Jim Foster, life long resident and current publisher of the Germantown Chronicle testified about information that was being withheld from court. He says that when Settlement attorney Thomas Bielli withdrew the plan of reorganization Settlement requested to be able to sell all three assets, the YWCA, the Burgess Center, and the Wayne Ave office space to a new buyer they had found. The attorney told the judge the YWCA was a gift to Settlement from the City of Philadelphia.
"That was incorrect, the YWCA was bought with a $1.3 million dollar loan with help from the city, " said Foster. "It was also 110 percent of the asking price for the building, more money than what it was worth, and Settlement never made a payment on it," he added.
Also, the Settlement attorney, Thomas Bielli, did not file any court document or notify the judge about the arson fire that destroyed two floors of the YWCA just a week before the hearing.
Needless to say, the judge was not pleased about the lack of information. In a turn of events, the judge decided that the Germantown community should have a representative in the case. Ackelsberg volunteered to be the attorney and Germantown Community Connection president Betty Turner will be the representative.
Debra Roberts, Director of Operations at the Wister Neighborhood Council, attended the bankruptcy hearing too. Wister NAC had paid Settlement to do their bookkeeping and when Roberts became a board member in 2006 the NAC took over their own financials again. They were shocked. Their taxes hadn't been paid, financial statements to the IRS were incomplete, and had to pay about $10,000 in liens.
Roberts doesn't think that Settlement has the ability to restructure, "Most of their properties have been vacant for 7 or 8 years. Settlement has been giving us this story of restructuring and reorganizing for almost ten years now. I don't believe they are capable of doing that."
The RDA is one of Settlement's largest creditors. Overall, including Greater Germantown Housing Development Corporation (GGHDC) a Settlement subsidiary, the non profit owes more than $38 million to date in loans from federal, state, and local government.
However there was no Redelvopment Authority (RDA) official present at the hearing on Thursday. Afterwards, Ackelsberg said he was disappointed that the RDA was not there.
“Perhaps we’re not seeing that much aggressiveness from the government because the government enabled and funded this disgrace for so long,” he said. “The big question is who’s calling the shots from the city [government].”
Instead, the RDA had filed a default notification on Thursday that said it is going to sell the YWCA by Dec. 7. Terry Gillen, Executive Director of the RDA, told the Philadelphia Inquirer that the agency decided reclaim the property so it can be restored and put back into use.
In 2006 the RDA loaned Settlement $1.3 million to purchase the Germantown YWCA. Court records indicate the loan was given to Settlement despite their past financial struggles at the word of City Councilwoman Donna Reed Miller. She is a former Settlement board member.
In a Philadelphia Inquirer interview Miller said, "I had no knowledge of their financial situation then. I just knew it used to be one of the city's best social-service agencies."
Despite concerns of dismissal, the Germantown Settlement bankruptcy case continues, but now with more community accountability.
By Kristen Mosbrucker and Josh Fernandez
Group 8