The School District of Philadelphia has dropped plans to suspend its agreement with a troubled charter school July 1, but will move ahead with a hearing to revoke it.

The district said Friday it was pursuing just revocation of Walter D. Palmer Leadership Learning Partners Charter School because a court battle over the School Reform Commission's power to suspend a charter could take months to resolve.

The district said it would proceed with a charter-revocation hearing, set for June 2, that would allow Palmer Leadership to present its case for staying open.

Walter D. Palmer, founder and board president, said Friday he was pleased that suspension was off the table.

He said the school still hoped to negotiate with the district to resolve issues, but would participate in a hearing.

"If the hearing is held, we are prepared to come and respond to every one of the allegations," Palmer said. "But we will continue to pursue every legal avenue we can."

The district's announcement is the latest development in the SRC's long-running feud with Palmer Leadership over enrollment and finances. The K-12 school has nearly 1,300 students on its campuses in Frankford and Northern Liberties.

On April 24, the SRC voted to begin the process of revoking the school's charter for poor academic performance and allegations of financial problems and billing the district for students who no longer go there.

At that time, the commission also said it intended to suspend the school's charter July 1 and shut off its funding.

The district has contended that the law that led to the state takeover of city schools in 2001 gives the SRC power to take that act and to disregard parts of state law because the district is in financial distress.

Palmer Leadership has challenged those powers, including the SRC's ability to suspend a charter.

Last week, the school asked a Common Pleas Court judge for an emergency injunction to halt the June 2 hearing on grounds the commission was skirting state law.

In its response Thursday objecting to an injunction, the district said it was abandoning the suspension because the state Supreme Court - in a separate case - had agreed to examine whether the SRC has the power to disregard some state laws.

The district told the court it would proceed with the revocation hearing, however, because the SRC was following a process outlined in the state charter school law.

Common Pleas Court Judge Gary S. Glazer denied the injunction Thursday because it was filed in a case about the SRC's ability to cap charter enrollment. He said the suspension issue was moot.

The school's lawyers filed a new complaint seeking an injunction late Friday.