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Protests Continue, Analysts Testify In Detroit Bankruptcy Trial

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Protesters gather outside the federal courthouse in Detroit where a bankruptcy trial is underway. (Credit: Vickie Thomas/WWJ Newsradio 950)

Protesters gather outside the federal courthouse in Detroit where a bankruptcy trial is underway. (Credit: Vickie Thomas/WWJ Newsradio 950)

vickiethomas2 Vickie Thomas
Vickie Thomas is the City Beat Reporter for WWJ Newsradio 950. She was...
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DETROIT (WWJ/AP) – Protesters lined up outside of the federal courthouse to voice their dissatisfaction with the way the city’s bankruptcy has been handled, while a trial to determine the city’s eligibility continued Thursday in Detroit.

“This entire process is illegal and it should be thrown out by Judge Rhodes,” said Abayomi Azikwe who helped organize the days demonstration.

The crucial decision on whether Detroit is eligible to be in bankruptcy court isn’t likely before mid-November.

Judge Steven Rhodes has set a Nov. 13 deadline for lawyers to file briefs on some key issues from a trial that began Wednesday. That means an immediate decision when the trial ends, possibly next week, is unlikely.

Rev. David Bullock said the outcome of the trail to determine if the city of Detroit is eligible for bankruptcy has nation-wide implications and could impact other struggling cities.

Bullock addressed two key questions in the case: is Detroit really broke and did emergency manager Kevyn Orr negotiate in good faith?

“(He’s) someone who said ‘Detroit is fat and lazy’ and had a CFO that joked about shooting folks on Angel’s Night and made fun of Trayvon Martin,” Bullock said. “The governor wants to block emails from being revealed to the public.”

“Do people who work in good faith do these kinds of things and say these kinds things?”

Detroit is trying to show it’s broke but also held good-faith negotiations with some creditors before filing for bankruptcy in July. Those are important requirements for the city to be declared eligible to reorganize in bankruptcy court.

Unions leaders say Detroit emergency manager Kevyn Orr and his team wanted bankruptcy, not negotiations.

“It’s a matter of life and death (for city retirees),” Azikwe continued. “You’re talking about people who are in their 60’s,70’s, 80’s, 90’s, and some are even over one hundred years old. You’re talking about cutting off their healthcare, reducing their pensions.”

Azikwe warned that what is happening in Detroit could soon start spreading throughout the country.

“If it happens to the people here in Detroit it’s coming to your suburb or your small town or your rural area next,” Azikwe said. “This is a threat to people all over the state of Michigan and, indeed, the United States.”

The city of Detroit has assets that might bring in much-needed cash, but any deals wouldn’t solve long-term problems with pensions and other obligations, a financial analyst testified Thursday.

“Those are one-time proceeds,” Gaurav Malhotra of Ernst & Young said under cross-examination by union lawyers on the second day of trial.

Malhotra, who has performed financial analysis for Detroit since 2011, acknowledged that the city has drawn up a list of assets that might attract investors, including a small airport, Joe Louis Arena and the city’s stake in a tunnel to Windsor, Ontario. But none, he said, would provide long-term financial relief.

Meanwhile, efforts to preserve cash mostly were limited to deferring payments to city pension funds, Malhotra testified.

The second witness, Charles Moore, a turnaround specialist from the Detroit-area firm Conway MacKenzie, talked about his experiences at City Hall.

“A number of departments were severely broken … unable to perform basic functions,” he said.

Moore said it would cost $500 million over six years to knock down blighted or abandoned buildings and improve vacant properties.

Police Chief James Craig is expected to testify about the impact of Detroit’s poor finances on public safety. Orr also will be a witness, along with Michigan Gov. Rick Snyder, who approved the bankruptcy filing.

If the city isn’t eligible to be in bankruptcy court, it would lose the upper hand to restructure $18 billion in debt.

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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