Trustee seeks sale of Germantown Settlement assets

The U.S. Trustee overseeing Germantown Settlement's bankruptcy wants the social service agency's assets sold to settle its debts.

The trustee's request, if approved by Chief Bankruptcy Court Judge Stephen Raslavich, would effectively close the financially troubled nonprofit, which has served Philadelphia's Germantown section for 126 years.

It comes on the heals of Raslavich's decision last week to order the sale of assets of a key Settlement subsidiary, Greater Germantown Housing Development Corp., to settle some of its debts.

Between them, Settlement and the subsidiary have reported about $16 million in debt. Of that figure, about $5.8 million is owed to city, state, and federal agencies. Taxpayers are likely to recover no more than $1.3 million, money lent to Settlement by the city's Redevelopment Authority to purchase the Germantown YWCA. The RDA plans to sell the YWCA at auction next month.

In a motion filed Monday, U.S. Trustee George M. Conway asked that Raslavich convert Settlement's bankruptcy case from Chapter 11 to Chapter 7.

Under Chapter 11, Settlement would be permitted to reorganize itself, pay off some debtors, and continue as a viable entity. A Chapter 7 calls for an organization's liquidation to cover its debts. The housing subsidiary is already in liquidation.

In seeking the change for the parent organization, the U.S. Trustee cited, among other things, Settlement's failure to file monthly operating reports with the court, its financial inability to operate its properties, and the unconfirmability of its reorganization plan.

Settlement's president, Emanuel Freeman, was in court Tuesday to resolve an issue that arose last week over his refusal to sign documents needed to secure short-term financing for the development subsidiary while it is in bankruptcy.

Raslavich threatened Freeman, who also is president of subsidiary, with arrest if he failed to come to court or provide the signed documents.

Freeman provided the signed documents Tuesday and apologized for missing last week's court session.

"I was unaware I was required to be here," he told Raslavich. "I meant no disrespect to the court."

Freeman declined to speak with a reporter about his agency's troubles.

"I've been advised by legal counsel not to do that," he said.