City of Chester, Pa., has filed a Chapter 9 bankruptcy petition due primarily to the extreme underfunding of its three pension plans.
Michael T. Doweary, receiver for the city since June 2020, filed the petition in bankruptcy court in the Eastern District of Pennsylvania in Philadelphia on Nov. 10, saying that the city lacks sufficient resources to pay its obligations.
The largest of those obligations is for the city's three pension plans: the Police Pension Plan, the Paid Firemen's Pension Plan and the Officers and Employees Pension Plan.
According to a declaration in support of the bankruptcy filed by Vijay Kapoor, president and owner of The Kapoor Company, who has served as Mr. Doweary's chief of staff, the city has not made the minimum required contributions to the plans since 2013 and owes a total of $40 million in prior year contributions, which would represent about 69% of the city's entire 2022 general budget. The city would also need to contribute an additional $87 million to fund the pension plans.
Mr. Kapoor noted the Police Pension Plan had only $4.6 million in assets as of Dec. 31 and did not note the asset sizes of the other plans.
In an earlier Receiver Recovery Plan from August 2020, Mr. Doweary said the police pension plan spends between $500,000 and $550,000 per month on monthly pension benefits to retirees.
Messrs. Doweary and Kapoor could not be immediately reached for comment.