DETROIT (WWJ/AP) – Detroit’s emergency manager testified in court Tuesday that he would have listened to any proposal to preserve retiree pensions before the city’s bankruptcy filing last summer — but that he probably would not have agreed to a deal.
Kevyn Orr, a lawyer and is a key witness, testified under cross-examination on the fifth day of a trial to determine if Detroit’s bankruptcy case can go forward.
A key issue is whether the city exhausted all other possibilities and held “good-faith” talks with creditors before the filing.
Unions and pension funds say no. They’re arguing that Orr’s proposal to creditors sacrifices millions of dollars in vested pension money that is constitutionally protected.
“Orr is under cross-examination by union attorneys. He’s coming under fire for supporting cuts in retirees’ pensions in a proposal to creditors,” WWJ’s Charlie Langton reported from the courthouse.
“Orr admitted that he was unaware of any legal authority that allows federal law to trump state law, that are guaranteed by Michigan’s constitution,” Langton said.
Also during Tuesday’s proceedings, the judge overseeing the trial scolded city emergency manger Orr for his long elaboration in response to yes-or-no questions.
Before a lunch break Tuesday, Judge Steven Rhodes said he’s been “ineffective” in getting Orr to limit his answers.
Orr apologized, and the judge told Orr he would accept the apology if Orr accepts his advice.
On the topic of art, Orr acknowledged on the stand that some pieces at the Detroit Institute of Arts are owned by the city and not held in trust by the museum. He said the museum’s collection is “very valuable” although appraisals aren’t in yet.
Orr has said in the past that — although he wouldn’t want to “be the person responsible for selling Grandma’s fine china or your wedding silver” — everything is on the table when it comes to taking care of Detroit’s debt.
Although the trial could wrap up later this week, a decision on the eligibility question isn’t expected for at least a couple of weeks.
Meantime, Gov. Rick Snyder, who testified Monday, says he still thinks he made the right decision in hiring Orr to serve as Detroit’s EM. Snyder also still believes Orr will complete his work by Fall of 2014.
“People have to recognize, and I hope they do — this is about dealing with 60 years of mess. This is accumulations of problems for decades,” the governor said, “So, this is one of the hardest problems in the United States — working through the issues of Detroit city government.
“But, it’s getting resolved,” Snyder said. “And, that’s the way I view it. It’s not going about — going back to blame people. It’s about solving the problem and that’s what we’re all focused on.”
Snyder wouldn’t speculate about whether he’ll extend Orr’s tenure or name a new emergency manager if Orr doesn’t complete Detroit’s restructuring in the allotted 18 months.
Detroit’s is the largest municipal bankruptcy filing in U.S. history.
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