CitiCapital Files Lawsuit Against City of Burlington VT
SEP 12, 2011 - 9:38 am
The Burlington Free Press reported that the Burlington Telecom (BT) lawsuit filed this month by CitiCapital Municipal Finance against Burlington and its law firm could be calamitous for the city in terms of the financial liability it represents, some officials fear.
City Council president Bill Keogh warns that the city, already facing budget pressures next year, may be forced to make heavy cuts in services, the paper said. In a related statement, Burlington mayor Bob Kiss said the city is reviewing the complaint and will vigorously defend the city’s interest in court.
The lawsuit portrays Burlington as a deadbeat that stiffed CitiCapital and deliberately misled bankers about the city’s ability to repay $33.5 million from a 2007 lease-purchase arrangement on behalf of Burlington Telecom. Lacking repayment, the lawsuit seeks repossession of Burlington Telecom’s equipment and vehicles, the paper said.
As previously reported on monitordaily, in August 2007, BT entered into a $33.5 million lease agreement that was subsequently terminated by CitiCapital in November 2010 for non-payment of interest and principal and the city’s failure to appropriate funds for fiscal 2011 scheduled lease payments. At the time the city said it would obtain replacement equipment either through a partnership or other means, which would allow the CitiCapital equipment to be de-installed and returned.
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