A federal bankruptcy judge has ordered the Chester Water Authority (CWA) to stop publicly commenting on its legal battle with the City of Chester’s state-appointed Receiver’s Office over the future of the city’s water system.
Judge Ashley M. Chan told the CWA earlier this summer that she did not want “any comment being made about the sale or the plan” because it could negatively affect the bidding process.
“So, don’t do it, period,” she said.
The judge’s gag order does not apply to the Receiver’s Office, which has begun soliciting bids for the water system.
It’s the latest twist in a years-long public dispute over who controls the CWA.
The CWA has long maintained it is not a city-owned enterprise.
Last fall, its attorneys argued the utility has “complete autonomy” because it is not part of the municipal government. They cited 2020 guidelines from the state Department of Community and Economic Development, which said municipal authorities are independent agencies and “not the creature, agent, or representative” of a municipality.
The Receiver’s Office disagrees.
When now-former Receiver Michael Doweary was appointed in 2020, he viewed the sale of the CWA as a way to help Chester regain financial solvency. The city had been under Pennsylvania oversight since 1995 through the Commonwealth’s Municipalities Financial Recovery Act (Act 47), but its fiscal woes persisted.
Doweary blamed mismanagement for the city’s financial problems. In 2022, he clashed with city officials over compensation and what he described as a one-sided parking contract. That same year, the city lost $400,000 in a phishing scheme. Doweary placed the city under Chapter 9 bankruptcy protection—a legal process for financially distressed local governments—that fall.
Chester’s pension and retiree healthcare obligations were also cited as major cost drivers. According to federal bankruptcy filings, the city has $396 million in unfunded retiree obligations.
That is why the Receiver’s Office— now led by Vijay Kapoor— and the City Council have viewed the CWA as a potential financial lifeline. They believe a sale of the water system’s assets could make a significant dent in the city’s debt.
The city first solicited bids for the CWA five years ago. In 2021, the Commonwealth Court ruled that Chester could sell the utility despite objections from the CWA board. The case is now before the Pennsylvania Supreme Court.
Last month, Kapoor accused the CWA of refusing to help the city prepare for a potential sale by withholding documents. He characterized the move as a stalling tactic.
“What we’re trying to do is have that procurement process continue while the state Supreme Court is rendering its decision, so that in the event the city does have the green light to do it, that we haven’t wasted a bunch of time,” he said during a July 22 meeting of the Municipal Financial Recovery Advisory Committee.
Frank Catania, an attorney for the CWA, declined to comment due to the judge’s order. “I’m not allowed to talk about the Receiver at all,” he told DVJournal.
In its Request for Proposals, the Receiver’s Office stated that any buyer must “maintain public ownership.”
Retirees, however, are pushing for full privatization. The Official Committee of Retired Employees has urged the federal bankruptcy court to order Chester to sell the CWA to Aqua Pennsylvania or Pennsylvania American Water.
In court filings, the committee claims the city could receive at least $400 million for the water assets. It argues that Kapoor has a duty to secure the best possible value for the city.
The CWA remains skeptical of the city’s pledge to keep the utility publicly owned. Catania previously told DVJournal that the promise could still apply to corporations: “They’re all publicly owned. They’re publicly traded.”
A spokesperson for Kapoor declined to comment.
The Pennsylvania Supreme Court is expected to rule on the case in the coming months.