Detroit Proposes Bankruptcy Plan By Dec. 31
DETROIT (WWJ/AP) – The city of Detroit says it wants to submit a plan to emerge from bankruptcy by year’s end, an aggressive time frame two months earlier than a judge has proposed.
Attorney David Heiman told a federal bankruptcy judge that “time is our enemy” and Detroit’s distressed finances “are not going to change.”
Judge Steven Rhodes opened Friday’s hearing announcing that he does not run city hall. He stressed that local officials remain “in full control” of Detroit services, and that any complaints or compliments should go to them.
It’s up to Rhodes to determine whether Detroit is eligible for bankruptcy. Creditors will have an opportunity to argue that the city hasn’t negotiated in good faith.
The courtroom packed, as were two overflow rooms.
“There were significant differences over the negotiations between the city and the creditors,” said WWJ Legal Analyst Charlie Langton, of Friday’s proceedings, “in part because of an lack of information being given by the city to the various creditors, including how to value certain assets — specifically, the water department.
“The creditors are saying that it’s [worth] millions of dollars; yet that exact information is not known, and it really prevents true negotiations for continuing,” Langton said.
Judge Rhodes authorized the appointment of a facilitator — with the power to gather information. He also set a strict number of deadlines both sides need to meet.
Nonetheless, Langton said there are still a lot of unanswered questions and hurdles still to overcome.
“Other issues that were not decided today but will come up in the future will be the role of the attorney general, Bill Schuette, in negotiations, ” said Langton. “And, also: how to handle lawsuits that were filed against the city. We expect that
Rhodes also ordered the creation of a committee to represent Detroit retirees.
At issue: Michigan’s constitution bars breaking public pensions, which are a key part of the city’s liabilities.
UAW President Bob King says Emergency Manager Kevyn Or failed to bargain in good faith with unions representing thousands of city workers.
“And I’m very, both, disappointed and angry that the governor and the emergency manager did not sit down and try and bring everybody to the table together to find common solutions,” King told CBS 62′s Carol Cain. “And they, to this date, have not had a bargaining session with AFSCME — which is the largest union representing workers in Detroit,”
King says cutting pensions for city workers will hurt the community by reducing their buying power, and force more people to lose their homes to foreclosure.
Detroit filed for Chapter 9 protection two weeks ago, citing a debt load of at least $18 billion.
Rhodes still must decide whether the city is eligible for bankruptcy. A trial is tentatively planned for late October.
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