Big Decision On Detroit Bankruptcy Coming Dec. 3

DETROIT (WWJ/AP) - A judge said Monday that he'll announce next week whether Detroit is eligible to overhaul itself in bankruptcy court, the most important decision since the largest public filing in U.S. history last summer.

Judge Steven Rhodes said he'll announce a decision on Dec. 3 and issue a written opinion later. By disclosing the date, Rhodes eased some of the public's anxiety about the future of the case.

He presided over a nine-day trial that ended Nov. 8. Unions and pensions funds claim Detroit isn't eligible for bankruptcy because it failed to hold good-faith negotiations before the filing in July. The city, however, insists it did enough during the preceding four weeks.

WWJ Legal analyst Charlie Langton says the judge will have to make two determinations.

"Is Detroit broke? And two, did Detroit bargain in good faith with creditors and pension holders before filing the bankruptcy? And after a nine day trial, I don't think there's any doubt that Detroit is broke, it can't pay its bills, it missed payments," Langton said.

A decision in favor of eligibility would mean the case would turn to how Detroit can fix $18 billion in debt. Appeals are likely no matter what Rhodes decides.

The city's emergency manager, Kevyn Orr, has warned of chaos if Detroit is thrown out of bankruptcy court. Creditors who were owed money at the time of the filing could sue for payment and the long-term debt will pile up.

"I have a feeling the (judge's) opinion's gonna be very , very lengthy because the entire country will be watching what Detroit does with its pension eligibility."

While the case has been playing out in public, there have been many private mediation sessions between Orr's team and creditors. The talks are aimed at making deals, especially if the judge finds Detroit is eligible for a makeover under Chapter 9.

[Continuing Coverage: Detroit Bankruptcy]

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