CHESTER, PA — The ongoing legal dispute between the City of Chester and the Chester Water Authority (CWA) reached a new turning point this week, as a federal bankruptcy judge ordered CWA’s attorneys to pay $135,575 in sanctions for what the court described as “obstructing discovery in bad faith.”
The ruling, issued Thursday by U.S. Bankruptcy Judge Ashely Chan of the Eastern District of Pennsylvania, found that CWA’s legal counsel failed to comply with previous court orders requiring them to release key documents to the City. The court determined that the attorneys’ actions intentionally delayed the discovery process during Chester’s municipal bankruptcy proceedings.
In her October 23 order, Judge Chan wrote that the CWA’s conduct “was intended to hinder and obstruct discovery in bad faith as part of its efforts to interfere with the RFP Process it has vehemently opposed since the Plan proposed it.” She added that the court “sincerely doubts that CWA would have ever made further production without the pressure applied by the Motion to Enforce,” concluding that sanctions were necessary to hold the Authority’s counsel accountable.
The dispute centers on records sought by Chester’s state-appointed Receiver, Vijay Kapoor, as part of the city’s bankruptcy plan and ongoing review of potential proposals related to the city’s water assets. In February, the court had ordered CWA to provide the requested materials, but the Authority’s attorneys withheld them until June—turning over nearly 12,000 documents only after the City filed a motion to compel compliance.
According to the order, the $135,575 sanction equals the amount the City incurred in legal fees to obtain the documents. “We are grateful for Judge Chan’s ruling, which makes clear that CWA’s counsel improperly interfered with the City’s bankruptcy rights,” Kapoor said in a statement.
Implications for Chester Water Authority Customers
For CWA’s roughly 200,000 customers across Delaware and Chester Counties, the court’s ruling underscores the uncertainty surrounding the Authority’s long-running legal and financial disputes with the City of Chester. The City’s bankruptcy case has revived questions about ownership, governance, and the potential sale or restructuring of the regional water system — issues that could ultimately affect rates, service stability, and long-term management of local water infrastructure.
Legal experts note that the sanctions may further strain relations between the Authority and the City at a time when cooperation is crucial to resolving Chester’s financial crisis. The City’s RFP process for evaluating water system options, which had already been delayed by the document dispute, is expected to play a central role in determining the system’s future ownership and operational model.
While the sanctions themselves will not directly affect water rates, they highlight the escalating tension between the two entities and the potential for ongoing legal costs to divert resources from system improvements and maintenance. For residents and businesses relying on CWA for water service, transparency and stability remain key concerns as the bankruptcy process continues.
As Judge Chan’s order makes clear, the City now has judicial backing in its effort to enforce compliance and move forward with evaluating the future of the Chester Water Authority — a process likely to shape the region’s water governance for years to come.
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