United States News
See other United States News Articles
Title: Detroit Bankruptcy Filing May Come As Soon As Friday
Source:
USA TODAY
URL Source: http://www.usatoday.com/story/news/ ... kruptcy-filing-friday/2552819/
Published: Jul 18, 2013
Author: USA TODAY
Post Date: 2013-07-18 15:10:27 by Brian S
Keywords: None
Views: 747
Comments: 5
DETROIT -- The city of Detroit is in final preparations to file for federal bankruptcy as early as Friday morning, several sources told the Detroit Free Press on Thursday. The filing would begin a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities. Detroit Emergency Manager Kevyn Orr, who in June released a plan to restructure the city's debt and obligations that would leave many creditors with much less than they are owed, has warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection. Michigan Gov. Rick Snyder would have to sign off on the filing. A spokeswoman did not immediately return telephone calls Thursday. Orr's spokesman Bill Nowling would not confirm Thursday that the filing is imminent. However, he said, "Pension boards, insurers, it's clear that if you're suing us, your response is 'no.' We still have other creditors we continue to have meetings with, other stakeholders who are trying to find a solution here, because they recognize that, at the end of the day, we have to have a city that can provide basic services to its 700,000 residents." This week, the city's two pension funds (which have claims to $9.2 billion in unfunded pension and retiree health care liabilities) filed suit in state court to prevent Orr from slashing retiree benefits as part of a bankruptcy restructuring. Ambac Assurance Guaranty, which insures some of the city's general obligation bonds, has also objected to Orr's plan to treat those bonds as "unsecured," meaning they're not tied directly to a revenue stream and would receive pennies on the dollar of their value. Ambac, and other creditors, have threatened to file suit. Sources agree that Orr's deal with creditors, widely reported to be Bank of America Corp. and UBS AG, to pay a $344-million swap with a $255-million debtor-in-possession loan, is instrumental in the timing of the potential bankruptcy filing. The deal gives the city access to $11 million a month in casino tax revenues that Orr has said is key to maintaining city services while negotiations, in or out of bankruptcy court, take their course with other creditors and unions. Plunkett Cooney bankruptcy lawyer Doug Bernstein, who is not involved in the bankruptcy and is not representing any parties related to it, said Thursday he had no direct information about whether or when the city would file, but said he understands the strategy if the city were to do so Friday or perhaps over the weekend. On Monday, an Ingham County Circuit Court judge is scheduled to hold a hearing on the city workers' and retirees' challenge to stop the city from filing bankruptcy. The employee groups, and separately the city's two pension funds in another lawsuit, argue that the governor — who under Michigan law must authorize any bankruptcy filing — cannot do so if the filings include plans to reduce pension benefits, because the state's constitution explicitly protects public pensions. Bernstein said preventing the court hearing Monday is probably a key part of the strategy behind a Chapter 9 petition by the city, because a ruling in favor of the employees could put a halt, at least temporarily, to any moves by Orr and Snyder to proceed with a bankruptcy petition. A bankruptcy filing immediately stays all such court proceedings. "The stay kicks in as soon as the filing, whether it's Friday or Monday," Bernstein said. "The key is taking advantage of the automatic stay. Because of the lawsuit filed by the pension funds and the hearings coming up Monday, it became a factor, so to the extent that (Orr) wanted to continue negotiations with creditors, now the city is forced to" file a Chapter 9 petition. The 30- to 90-day eligibility fight could be prolonged beyond that time frame if creditors mount a significant challenge to Detroit's eligibility for bankruptcy. In other communities that have filed for Chapter 9 protection, such fights have extended the process a year or more, including Jefferson County, Ala., and Stockton, Calif., two of the largest municipal bankruptcy filings so far in the United States. Detroit's would be by far the largest municipal bankruptcy in U.S. history, in terms of the city's population of about 700,000 and the amount of its debts and liabilities, which Orr has said could be as high as $20 billion. Because of the stakes involved, and the impact on residents statewide, as well as 30,000 current and retired city workers and Detroit's ability to stay in business, the case could be precedent setting in the federal judiciary. It could also set an important trajectory for the way troubled cities nationwide settle their financial difficulties. Bernstein noted that Orr has said repeatedly his office would "negotiate with creditors until and unless we find that the negotiations won't bear fruit, with the understanding that the city has a limited amount of time" for those talks.
Post Comment Private Reply Ignore Thread
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Brian S (#0)
(Edited)
Redraw the US border south of Detroit. It's Canadian then, eh?
They could burn Detroit to the ground and I don't think too many people would notice or care. Hopefully they will do it at night, I might be able to see the glow on the horizon.
"Those who don't know history are destined to repeat it."
Blacks already burnt much of the city to the ground during the 67 riots. The city was never rebuilt.
Sad fate for the motor city. Or former motor city.
The City of Detroit filed this afternoon for Chapter 9 bankruptcy protection in federal court, laying the groundwork for a historic effort to bail out a major U.S. city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue. The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities. “The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” said Gov. Rick Snyder. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making.” Detroit emergency manager Kevyn Orr, who in June released a plan to restructure the city's debt and obligations that would leave many creditors with much less than they are owed, had warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection. ■ PDF: Read the bankruptcy filing Gov. Rick Snyder signed off on the filing in a letter attached to court documents filed today in U.S. Bankruptcy Court in the Eastern District of Michigan. A spokeswoman for Snyder did not immediately return telephone calls today. “It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available,” Snyder said in the letter granting his state-required approval. “In other words, the City’s financial emergency cannot be satisfactorily rectified in a reasonable period of time absent this filing.” Snyder continued: “I have reached the conclusion that this step is necessary after a thorough review of all the available alternatives, and I authorize this necessary step as a last resort to return this great City to financial and civic health for its residents and taxpayers. This decision comes in the wake of 60 years of decline for the city, a period in which reality was often ignored.” Orr spokesman Bill Nowling said: “Pension boards, insurers, it’s clear that if you’re suing us, your response is ‘no.’ We still have other creditors we continue to have meetings with, other stakeholders who are trying to find a solution here, because they recognize that, at the end of the day, we have to have a city that can provide basic services to its 700,000 residents.” ■ Related: Detroit’s pension boards file suit to block cuts in workers’ benefits ■ Editorial: How Detroit came to betray its retirees ■ PDF: Read Kevyn Orr’s plan to creditors ■ Full coverage: Detroit’s financial crisis This week, the city’s two pension funds (which have claims to $9.2 billion in unfunded pension and retiree health care liabilities) filed suit in state court to prevent Orr from slashing retiree benefits as part of a bankruptcy restructuring. Ambac Assurance Guaranty, which insures some of the city’s general obligation bonds, has also objected to Orr's plan to treat those bonds as “unsecured,” meaning they’re not tied directly to a revenue stream and would receive pennies on the dollar of their value. Ambac, and other creditors, have threatened to file suit. Sources agreed that Orr’s deal with creditors, widely reported to be Bank of America Corp. and UBS AG, to pay a $344-million swap with a $255-million debtor-in-possession loan, is instrumental in the timing of the potential bankruptcy filing. The deal gives the city access to $11 million a month in casino tax revenues that Orr has said is key to maintaining city services while negotiations, in or out of bankruptcy court, take their course with other creditors and unions. Plunkett Cooney bankruptcy lawyer Doug Bernstein, who is not involved in the bankruptcy and is not representing any parties related to it, said today that the filing was critical for the city, given a growing number of legal challenges. On Monday, an Ingham County Circuit Court judge was scheduled to hold a hearing on the city workers’ and retirees’ challenge to stop the city from filing bankruptcy. The employee groups, and separately the city’s two pension funds in another lawsuit, argue that the governor — who must and has authorized the bankruptcy filing — cannot do so if the filings include plans to reduce pension benefits, because the state’s constitution explicitly protects public pensions. If the state has such plans, it wasn’t immediately presented in the court filing. Bernstein said preventing the court hearing on Monday was likely a key part of the strategy behind a Chapter 9 petition by the city, because a ruling in favor of the employees could put a halt, at least temporarily, to any moves by Orr and Snyder to proceed with a bankruptcy petition. A bankruptcy filing immediately stays all such court proceedings. “The stay kicks in as soon as the filing, whether it’s Friday or Monday,” Bernstein said. “The key is taking advantage of the automatic stay. Because of the lawsuit filed by the pension funds and the hearings coming up Monday, it became a factor, so to the extent that (Orr) wanted to continue negotiations with creditors, now the city is forced to” file a Chapter 9 petition. The 30- to 90-day eligibility fight could be prolonged beyond that time frame if creditors mount a significant challenge to Detroit’s eligibility for bankruptcy. In other communities that have filed for Chapter 9 protection, such fights have extended the process a year or more, including Jefferson County, Ala., and Stockton, Calif., two of the largest municipal bankruptcy filings so far in the U.S. Detroit’s bankruptcy is by far the largest of its kind in U.S. history, in terms of the city’s population of about 700,000 and the amount of its debts and liabilities, which Orr has said could be as high as $20 billion. Because of the stakes involved, and the impact on residents statewide, as well as 30,000 current and retired city workers and Detroit’s ability to stay in business, the case could be precedent setting in the federal judiciary. It could also set an important trajectory for the way troubled cities nationwide settle their financial difficulties. Bernstein noted that Orr has said repeatedly his office would “negotiate with creditors until and unless we find that the negotiations won’t bear fruit, with the understanding that the city has a limited amount of time” for those talks. City Council President Pro Tem Andre Spivey said he understood that negotiations Orr was having with creditors weren’t as fruitful has he’d hoped they be, and that he hopes the bankruptcy process will be relatively quick. But he stressed to residents that they needn’t worry about the impact of the filing immediately. “City services we provide will not be shut down,” Spivey said. “We’ll still be providing services, but the challenge is where we’re going to get to as we go through the bankruptcy process.” Other local political leaders were quick to respond to the news. “This is a sad day when the largest city in the state of Michigan goes into bankruptcy. A couple concerns immediately come to mind,” said Wayne County Executive Robert Ficano. “One is the effect it’s going to have, not only on the city of Detroit but southeast Michigan and the state of Michigan as well. This is going to reverberate through all the bonds, all the finances, of not only the counties in this area but also the municipalities and probably the State of Michigan. It’s not going to paint a pretty picture for other local municipalities trying to get finances.” By contrast, Detroit’s neighboring county to the north Oakland County, is one the wealthiest counties in the nation. “This bankruptcy is unfortunate but was predictable.,” said County Executive L. Brooks Patterson. “The hole was too deep, and now a lot of good people who were not involved with the bad decisions will now have to pay the price.” The city has lost more than half of its population over the past 60 years. In 1950, the city was the fifth largest city in the country with a population of around 1.8 million. Today its population is estimated at just under 700,000.
Never swear "allegiance" to anything other than the 'right to change your mind'!
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#2. To: Brian S (#0)
#3. To: CZ82 (#2)
They could burn Detroit to the ground and I don't think too many people would notice or care. Hopefully they will do it at night, I might be able to see the glow on the horizon.
NSA SEARCH TAG: Tea Party, White House, Constitution, Obama, Allahu Akbar, Air Plane, Pressure Cooker, Ruby Ridge, Waco
#4. To: Brian S (#0)
#5. To: All, Detroit Files For Chapter 9 Bankruptcy Amid Staggering Debts (#0)
Top • Page Up • Full Thread • Page Down • Bottom/Latest
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]