Bridgeport may file a motion with the federal Bankruptcy Court to reopen hearings on the city's solvency because of a letter from Connecticut's budget chief to Mayor Mary C. Moran.

James G. Verrillo, a partner with Bridgeport bankruptcy counsel Zeisler & Zeisler, said a letter dated Aug. 29 from William J. Cibes Jr., the secretary of the office of policy and management and chairman of a board that oversees Bridgeport's finances, could give new life to the city's bankruptcy bid by proving the city faces an inability to pay its debts in its current fiscal year.

The letter became the subject of discussion in a meeting yesterday with U.S. Bankruptcy Judge Alan H. W. Shiff, according to the attorney.

On Aug. 1, Judge Shiff ruled that Bridgeport did not meet the federal Bankruptcy Code's insolvency test because it had $27 million in cash when it filed its bankruptcy petition and faced a budget gap of only $16 million.

Mr. Cibes's letter explained that $25 million of the city's cash, left over from a 1989 state-backed deficit bond issue, cannot be used to help the city close its budget gap. "That letter is now becoming a critical factor," Mr. Verrillo said.

When the judge saw the letter forbidding the use of the $25 million to balance Bridgeport's budget, he said, "Wait a minute. I thought those funds were available," according to Mr. Verrillo.

The attorney said the motion for rehearing could be filed with Judge Shiff's court by the end of next week. The city on Tuesday filed a notice of appeal, indicating it would appeal Judge Shiff's ruling on the insolvency issue to the U.S. District Court. That appeal could be "held in abeyance" if the city chooses to take the new legal take of re-opening hearings in Bankruptcy Court.

Yesterday's development, Mr. Verrillo said, signals the possibility of "an effort to reopen the trial for additional information or information that did not come out in a clear light at the previous proceeding."

Also yesterday a spokeswoman for Connecticut's attorney general said the state will appeal a ruling in the bankruptcy case.

The state has until Sept. 13 to file its notice of appeal, but the spokeswoman said Attorney General Richard Blumenthal had already decided to move forward with the process.

Mr. Blumenthal had vowed from the beginning to Judge Alan H.W. Shiff's July 22 ruling that found Connecticut's statutes provide the necessary authorization for the state's cities and towns to use Chapter 9, the section of the bankruptcy code for municipalities.

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