Detroit bankruptcy battle hinges on who does the most homework

Sep 4, 2014

Detroit Federal Courthouse, where the Detroit bankruptcy proceedings are taking place
Detroit Federal Courthouse, where the Detroit bankruptcy proceedings are taking place
Credit User: cseeman / Flickr

The historic Detroit bankruptcy trial is in its third day.

The opening salvos have been fired, and they've begun calling witnesses.

Detroit News business columnist Daniel Howes has been at the courthouse. He says that history is unspooling in Judge Steven Rhodes' courtroom, but there’s a distinct lack of public interest.

“You go in the media overflow room, and there’s like two people sitting there … There were protesters the first day, there was none really to speak of the second day,” says Howes.

Yet it’s still a very important proceeding that’s going on here. If the city wants to win the trial and reach the "grand bargain," Howes points out, the bankruptcy team has to prove that it had done its homework and looked into alternatives to raise cash to pay creditors.

“What Syncora and FGIC  (Federal Guaranty Insurance Company) are saying is, (the bankruptcy team) didn’t even do the work. Basically they are saying they are a bunch of lazy people that had a preconceived goal in mind and didn’t even do the basic blocking-and-tackling analysis to get to the conclusion that they drew,” says Howes.

*Listent to the interview with Daniel Howes above.