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Detroit Bankruptcy Trial Reaches 8th Day

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Protestors rally in front of the U.S. Courthouse in Detroit where Detroit's bankruptcy eligibility trial is taking place. (Credit: Bill Pugliano/Getty Images)

Protestors rally in front of the U.S. Courthouse in Detroit where Detroit’s bankruptcy eligibility trial is taking place. (Credit: Bill Pugliano/Getty Images)

DETROIT (WWJ/AP) - Detroit’s bankruptcy trial is entering its eighth day with the return of former Michigan Treasurer Andy Dillon to the witness chair.

Dillon has been a witness for unions and pension funds challenging Detroit’s eligibility to remake itself in bankruptcy court. He says he supports the bankruptcy, but a July email shows he was concerned that the city wasn’t doing enough with creditors before the filing.

“I don’t think we are making the case why we are giving up so soon to reach an out-of-court settlement. Looks premeditated,” Dillon wrote. “I think we may want a take-it-or-leave-it demand before we pull this trigger. I agree with the recommendation but I don’t think we make the case.”

Unions and pension funds want the judge to dismiss the case, claiming the city failed to hold “good-faith” negotiations, an important step for a local government to be eligible to restructure in bankruptcy court.

The trial is resuming Thursday after a day off.

Dillon says Gov. Rick Snyder wanted a fast, efficient bankruptcy that could be wrapped up during the 18-month term of Detroit emergency manager Kevyn Orr.

Snyder has said bankruptcy seemed inevitable after Orr in June offered creditors just 10 cents on every dollar owed. The city says it has debt of $18 billion.

Orr, who was appointed by the governor in March, has defended his actions with creditors, noting that four weeks passed between a meeting to describe the city’s finances and the bankruptcy filing.

But the UAW’s chief lawyer, Michael Nicholson, portrayed Orr and his team as inflexible. He said attendees weren’t always free to speak at private meetings and instead were required to put questions on cards.

“I’ve never been in negotiations where only one side speaks,” Nicholson testified Tuesday.

He acknowledged the UAW had no interest in negotiating pension cuts because public pensions are protected under the state constitution. But he said he was willing to put together a coalition to talk about health insurance.

“Mr. Orr never responded. … They never took us up on it,” Nicholson said.

Continuing Coverage: Detroit Bankruptcy

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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