bankruptcy

Courtesy photo / Holland BPW

This week, Jack Lessenberry and Emily Fox discuss Detroit’s pending bankruptcy exit, confusion over the Religious Freedom Restoration Act, and a Senate bill that would count the burning of tires, used oil and other waste products as renewable energy.


Steve Carmody / Michigan Radio

A recent analysis by Moody's Investor's Service offers the prediction that Flint will not follow along the bankruptcy path set by Detroit.

Even though the two cities share many of the same problems and challenges, Moody's believes bankruptcy is not in the cards for Flint.

John Pottow is a University of Michigan law professor and a bankruptcy expert. Pottow also says bankruptcy is unlikely for the city right now, because he believes Flint actually has a long term term plan of meeting a balanced budget since a state-appointed emergency manager was appointed several years ago.

Well, yesterday was indeed one of the more momentous days in Detroit’s modern history. The city not only reached an agreement with Syncora, the major opponent of its bankruptcy filing. Detroit also reached a deal with the suburbs on the water system, something that has eluded everyone for years.

When I heard about all this, I was instantly reminded of economist Paul Romer’s famous quote: “A crisis is a terrible thing to waste.” Detroit is in its worst crisis since Cadillac beached his canoes and scrabbled up the riverbank in 1701.

And for once, it hasn’t wasted it. Whatever you think of Federal Bankruptcy Judge Steven Rhodes and Detroit emergency manager Kevyn Orr: This would not have happened without them. Rhodes is the real hero in the water settlement.

Oakland County Executive L. Brooks Patterson acknowledged this yesterday. For more than 40 years, Patterson has had a political career based on bashing Detroit. He had no intention of ever agreeing to a water deal with the city.

But Patterson knew that if he wasn’t willing to play ball, Rhodes could, quote, “cram down our throats his settlement of this issue, and this was always looming over our heads.”

The settlement itself is reasonable, logical, simple, and could have been designed by a graduate class in political science. A new Great Lakes Water Authority is being created.

Detroit bankruptcy judge Steven Rhodes.
John Meiu / Detroit Legal News Publishing LLC

A recent order from the court reads like a Facebook argument.

It started with Syncora, a major bond insurer that claims Detroit owes it more than a billion dollars.

The company filed an objection to the “grand bargain” that’s been coming together to save the Detroit Institute of Arts and protect the city’s pensioners.

Basically, Syncora says it and other Wall Street creditors are getting treated like the bad guys, while the DIA and the pensioners are clearly the hometown favorites.

GM Renaissance Center in Detroit.
John F. Martin / Creative Commons

At 8 a.m. on June 1, 2009, General Motors filed for Chapter 11 reorganization. That filing in the bankruptcy court in Manhattan was the start of a painful and historic journey for General Motors. 

Five years later, after a massive government equity investment, General Motors is doing well, although it has been rocked recently by the ignition switch recall controversy, and a blizzard of other recalls. 

Let's take stock of what GM has done in the last five years, and see if the prevention of job and income losses was worth the cost to taxpayers. 

Sonari Glinton is NPR's business reporter, and he joined us on Stateside. 

*Listen to the full interview above. 

Steve Carmody / Michigan Radio

LANSING, Mich. (AP) - Mediators in Detroit's federal bankruptcy case say that building trade unions have agreed to contribute to a fund to cover retirees' benefits.

Some legislative Republicans have made union contributions to the pensions a condition for state aid, designed to protect the Detroit Institute of Arts' collection from sale to cover the costs.

A state House committee is to vote Tuesday spending $195 million to help Detroit emerge from bankruptcy.

Governor Snyder hopes the State House will make progress toward approving the ‘Grand Bargain’ this week.

Critics complain it’s not fair for the rest of the state to pay for Detroit’s financial missteps. Supporters say restoring Detroit to financial health is important to all of Michigan.Credit Steve Carmody / Michigan RadioEdit | Remove

Steve Carmody/Michigan Radio

DETROIT (AP) - General Motors Co. says it will resume paying a quarterly dividend, its first since the height of the financial crisis in 2008

The U.S. automaker's CEO Dan Akerson had hinted that a dividend may be coming and the company confirmed the move Tuesday. General Motors says its dividend of 30 cents per share is payable March 28 to stockholders of record as of March 18.

The Detroit-based company says investors should share in the company's success and that the dividend is a signal of confidence for a profitable future.

Detroit bankruptcy judge Steven Rhodes.
John Meiu / Detroit Legal News Publishing LLC

The judge in Detroit’s bankruptcy case says creditors can appeal his recent eligibility ruling directly to a higher federal court.

Judge Steven Rhodes ruled earlier this month that Detroit is eligible to proceed with its historic bankruptcy case.

He also ruled that city pensions can be cut in federal bankruptcy court — despite a public pension guarantee in Michigan’s state constitution.

City unions, pension funds and retiree groups immediately said they intended to appeal both decisions.

The Detroit Institute of Arts
Flickr

What’s going to happen with the Detroit Institute of Arts?

 

That’s the question on the minds of many Michiganders after the city of Detroit was deemed eligible for Chapter 9 bankruptcy on Tuesday.

Daniel Howes, a business columnist with The Detroit News, talks with us about all things DIA – a recent appraisal of the institute’s collection, emergency manager Kevyn Orr’s interest in the museum, and a possible rescue plan cooked up by a federal judge.

Listen to full interview above. 

Bob Jagendorf / Flickr

Ever since Detroit’s became the biggest in American history to seek bankruptcy protection, the term “death spiral” has been in the spotlight.

The spiral often begins with promises made to municipal workers. Pensions and health coverage are becoming too much for many cities and states to bear. But the law tells mayors and governors that those pension plans need to remain intact.

As pension costs mount, they try raising taxes, or turning to the municipal bond market. And when those doors are slammed shut, what happens? Essential services get cut, pink slips start flying, and businesses and homeowners get out of town, leaving behind a smaller and poorer population even less able to cover a city’s soaring costs.

When we talk about Detroit's bankruptcy filing, the point seems to almost always be made that this is historic. That Detroit is the largest city in U.S. history to seek bankruptcy protection. But, that was almost not the case. In the mid 1970's New York City was on the brink of financial crisis. On today's show: What can Detroit learn from New York's comeback?

And, as of today, the University of Michigan Hospitals and Health Centers will no longer sell sugar-sweetened drinks. It's a not-too-subtle push to get healthy, but is it taking away our choice as a consumer? Is it going too far?

Also, the Michigan Women's Hall of Fame has just announced its latest list of inductees. We took a closer look at one of these influential Michigan women.

First on the show, Republicans in Lansing are split over whether people who bankroll so-called “issue ads” should be allowed to remain anonymous.

Issue ads attack or support politicians or causes without using what are called “magic words" like “vote for” or "oppose." Unlike campaign ads, the money behind issue ads can be anonymous.

But, late last week, Michigan Secretary of State Ruth Johnson proposed new rules that would require disclosure of issue-ad donations.

Johnson said, too often, issue ads are just thinly disguised political ads, and people should know who is paying for them.

But, many Republicans disagree. In fact, within hours of Johnson's proposal, the GOP-led Senate acted quickly to amend a campaign finance bill that would make Johnson's new rules illegal.

Rich Robinson, Executive Director of the Michigan Campaign Finance Network, and Jonathan Oosting, Capitol reporter for MLive.com, joined us today.

Peter Martorano / Flickr

In virtually every discussion and report about Detroit's bankruptcy filing, the point is made that this is historic. That Detroit is the largest city in U.S. history to seek bankruptcy protection.

But, that nearly was not the case. New York City was a hairs-breadth away from earning that unenviable distinction in 1975.

We wondered what comparisons could be made between Detroit's crisis today and New York's in the 70's, and if there are lessons Detroit could learn from New York's recovery.

Out next guest has taught at Yale for 46 years, he was part of five New York City governments and he is a noted urban planner, educator and author of The Planning Game: Lessons from Great Cities and The American City: What Works, What Doesn’t.

Alex Garvin joined us today from New York City.

Listen to the full interview above.

The Detroit Institute of Arts
Flickr

If anything’s clear coming from Detroit’s bankruptcy case it is this: the city needs new solutions.

Daniel Howes, Detroit News business columnist, wrote his column today on a proposal from Chief U.S. District Judge Gerald Rosen. Rosen is proposing a new private fund that could have a major impact on the future of the Detroit Institute of Arts, the city’s retired workers and bankruptcy proceedings.

Listen to the full interview above.

Steve Carmody/Michigan Radio

Michiganders who still like to browse video store shelves will soon lose one of the few outlets left.

The last Blockbuster video stores in Michigan will soon close.

For many Michiganders, there was a time when a trip to their neighborhood Blockbuster was a big part of their weekend plans.

Steve Carmody/Michigan Radio

With all the talk about Detroit’s path into bankruptcy court, some people have been asking why hasn’t Flint gone the same route?

Like Detroit, Flint’s city finances have been a mess for a long time.

Governor Snyder not only appointed an emergency manager to run Flint, he did so more than a year before he appointed one in Detroit.

Politicians are falling all over themselves in Washington and in Lansing to oppose spending any money to, as they put it, “bail out” Detroit.

Wikipedia

It's been just over a week since Detroit became the largest city in American history to file for bankruptcy protection under Chapter 9.

Until now, that unwanted distinction belonged to Stockton, California.

Earlier this year, Bridge Magazine writer Ron French wrote an article about his visit to bankrupt Stockton and Vallejo, a California town that has emerged from bankruptcy.

As Ron puts it, if Stockton is an example of a city just being diagnosed with fiscal "cancer," Vallejo is a community that has finished chemotherapy. And so far nobody seems particularly thrilled with the results.

Ron French joined us today. 

Bernt Rostad / creative commons

Everyone is waiting to see how Detroit's historic bankruptcy filing plays out in court. Though Detroit is the largest city to ever file for bankruptcy, other cities have done it.

But, while some have been granted protection under Chapter 9, other cities were denied protection, or never even got to court.

More specifically: Bridgeport, Connecticut; Hamtramck, Michigan; Washington Park, Illinois; Boise County, Idaho and Harrisburg, Pennsylvania. 

There are basically two reasons that these cities weren't granted protection: the federal bankruptcy court deemed that they had enough money to cover their debt for the fiscal year, or that they simply didn't have the authority to file for Chapter 9.

Here's a breakdown of what happened to them, and why the court ruled the way it did:

Flickr user jpowers65 / Flickr

The Detroit-Windsor Tunnel, the underwater highway that connects the U.S. to Canada, could be in trouble.

American Roads LLC, the privately-held company that operates the U.S. side of the mile-long border crossing, as well as four toll bridges in Alabama, has filed for Chapter 11 bankruptcy protection, citing low traffic as the cause, according to a report from Reuters.

The company is $830 million in debt and is seeking to restructure. Under their plan of reorganization, Syncora Guarantee, Inc. will become the tunnel’s new owner after the bankruptcy. The plan will go to the bankruptcy court in Manhattan on August 28 for approval.

Earlier this month, Windsor Mayor Eddie Francis told the Detroit Free Press that Canada would consider buying the tunnel if sold in bankruptcy:

“As long as the tunnel remains in the public interest, then the City of Windsor has no interest in the tunnel. However, if at that time there is a move to take the Detroit half of the tunnel, if it is put on the auction block or if it is being sold or disposed of in a way that is adverse to the public interest, then the City of Windsor will take steps to do whatever we can do to make sure it remains in the public interest.” 

American Roads' chief executive Neal Belitsky said in court papers that this is not a result of Detroit’s Chapter 9 bankruptcy filing last week, although that did not help. The company is blaming Detroit’s declining population for the reduced traffic.

During the bankruptcy process, tunnel operations will continue as usual.

-Michelle Nelson, Michigan Radio Newsroom

Bernt Rostad / creative commons

Eventually, Detroit’s bankruptcy filing will be over. Eventually, Emergency Manager Kevyn Orr will no longer be in charge of Detroit’s finances.

When those things happen, Detroit will go back to being run by its city government, by a mayor, and a city council.

Daniel Howes, columnist at The Detroit News, focused on this future in his column yesterday in the News. He joined us today to discuss whether Detroit can shed its bad governance habits in light of the bankruptcy.

Listen to the full interview above.

Photo courtesy of the Office of Congressman Dan Kildee

The Chapter 9 bankruptcy filing by the city of Detroit has some wondering if Detroit is not an isolated incident. Could other financially struggling cities be on the same path?

Yesterday on Stateside we spoke with Eric Scorsone, economist at Michigan State University:

Certainly other cities in Michigan absolutely face these same cost pressures, whether it’s Flint or Lansing or Saginaw. They absolutely face these same problems. And, again, they’re better off relative to Detroit than today. But, they’re still facing these problems and they need to make sure they’re proactive in managing to prevent anything like this.

With that in mind, we turned to Michigan Democratic Congressman Dan Kildee. Kildee represents two of the cities Scorsone mentioned: Flint and Saginaw.

Listen to the full interview above.

Patrick Gibson / Flickr

As Detroit moves into the process of Chapter 9 bankruptcy, one of the most powerful people in the city, arguably the most powerful person in the city, has become the judge to whom the case was assigned.

U.S. Bankruptcy Judge Steven Rhodes will preside over the largest municipal bankruptcy in American history, so many eyes from around the country will be trained on him.

We wanted to learn more about Judge Rhodes and for that, we turned to Detroit Free Press reporter Brent Snavely.

Listen to the full interview above.

User: Brother O'Mara / flickr

Buena Vista and Inkster school districts to be dissolved

The state is moving ahead to dissolve the Inkster and Buena Vista school districts. Both districts failed to meet a deadline yesterday to prove they could keep their doors open next school year. Now state officials say it could be a matter of days before the districts are dissolved, Michigan Public Radio's Jake Neher reports.

Protesters arrested at pipeline worksite

Enbridge energy is building a 285 mile pipeline across Michigan that will carry tar sands oil. The pipeline will replace the one that ruptured three years ago. Yesterday, protesters chained themselves to heavy equipment at a worksite southeast of Lansing. They say the new pipeline will present an environmental threat. Twelve people were arrested at a protest yesterday, Michigan Radio's Steve Carmody reports.

Will Detroit retirees see pension cuts?

A federal bankruptcy court will now be the scene for some huge decisions about the future of Detroit which filed for Chapter Nine protection last week. One of the key issues is whether retirees will see their benefits cut. Michigan Radio's Sarah Hulett has more.

On this Monday, July 22, four days after Detroit made history by filing for Chapter 9 bankruptcy, we spent the first half of the show breaking things down and figuring out where things stand in the nation's largest municipal bankruptcy ever.

And, we looked at what needs to be done to preserve and protect Michigan's rivers and lakes.

But, back to Detroit and what we know right now. A judge in Lansing will take a week to sort through arguments on whether the state Constitution protects Detroit’s pension funds from losses if the city goes bankrupt.

Ingham County Circuit Judge Rosemary Aquilina says she will decide next Monday whether Detroit's bankruptcy filing violates the state Constitution, and its protections for pension benefits.

Assuming the Chapter 9 bankruptcy goes forward, Detroit will have to figure out how to reduce billions of dollars of debt. Creditors, of course, will push for the most money they can get, which means they're eyeing some of the city's most valuable and treasured assets.

Peter Martorano / Flickr

In the days before and after Detroit filed for bankruptcy, you didn’t have to look too far to read and hear comments about Detroit that range from dumb to mean-spirited to outright vicious.

One has to wonder: Just why did actor Jon Hamm of AMC’s Mad Men have to take a shot at the city of Detroit while hosting the ESPY awards last week, talking about San Francisco beating Detroit in the World Series?

Why did a co-worker flying back to Detroit from an out-of-town visit hear the guys in the row behind her discussing the Detroit bankruptcy to be summed up by one man declaring, “I wish we could just dump Detroit into the lake. We’d all be so much better off.”

A Detroit Free Press reader commented “Way To Go Mo Town!!! We Knew You Could Do It!!! Now, Everybody Gets Nothing!!!”

And the Twittersphere has been mighty busy mocking the Motor City. Just check out #newdetroitcitymottos.

We wanted to go deeper into these attitudes. Would things like this be said, say, if it was Chicago or Atlanta having to file for bankruptcy? How far back does this scorn for Detroit reach? How much of this attitude permeates the halls of Congress?

We were joined today by Michigan Radio’s political analyst Jack Lessenberry and Todd Spangler from the Detroit Free Press Washington bureau.

Listen to the full interview above.

Michigan State University

No matter who is commenting or offering expert opinion on the Detroit bankruptcy, everyone seems to agree on the fact that this is "uncharted territory." And that's about all they can agree on.

Take the speed of the bankruptcy: you can find experts who predict a slow, tortuous process. And just as easily, you'll find predictions that Kevyn Orr will move this bankruptcy faster than anyone expects.

And, did Kevyn Orr and Governor Snyder have any other options to help Detroit back to financial stability?

And what does this all mean for other cities in Michigan and the state's economy?

So many questions, so many opinions. That's why we were very glad to welcome into the studio Eric Scorsone, economist with Michigan State University and an expert on the ins and outs of government finances.

Listen to the full interview above.

Photo courtesy of the DIA

Kevyn Orr is Detroit’s state-appointed emergency manager. And he has some pretty extraordinary powers to chart the course of Detroit’s potential bankruptcy—and its future.

Last Friday, Orr took questions from reporters. The very first question he faced was pretty much, ”What’s for sale?”

“Right now there’s nothing for sale, including Howdy Doody.”

Orr was actually referring to the Detroit Institute of Arts, whose collection includes the original puppet from the 1950s children’s TV show. Though no one knows for sure, the DIA’s total assets — which include masterpieces by Van Gogh and Picasso — could be worth about $2.5 billion.

Ingham County

Ingham County Circuit Judge Rosemarie Aquilina says she will decide next Monday whether the bankruptcy filing violates the Michigan Constitution, and its protections for pension benefits. 

Ronald King is an attorney for city pension funds. He says the bankruptcy can still go forward. But he says the state should not proceed on anything that might threaten pension benefits.

"Maybe the courts will disagree with us, but there is a constitutional protection in place that guarantees or protects accrued pension benefits, and we have an obligation to at least play that out."

That could be a problem when it comes to dealing with Detroit's heavy debt burden. Pension funds are among the city's largest creditors. The state says the case belongs in federal court. 

User: Brother O'Mara / flickr

Detroit bankruptcy is topic of national conversation

Snyder, Detroit's emergency manager Kevyn Orr and Detroit Mayor Dave Bing appeared on Sunday morning talk shows yesterday to talk about filing bankruptcy for Detroit. Snyder said he will push to protect the retired city workers whose pensions are on the table. He said the bankruptcy filing included protections for retirees and urged them to remain calm. Orr said on "Fox News Sunday" that there are going to have to be "concessions." Bing on ABC's "This Week" said now that bankruptcy has been filed, leaders have to take a step back before making a decision on a federal bailout.

Flint school district faces more budget cuts

The Flint School Board will take up a Deficit Elimination Plan tomorrow night. The district is wrestling with a nearly 16 million dollar deficit. The Flint school district has made deep budget cuts but more cuts are likely if the district follows the plan to eliminate its deficit by June 2016. The Flint School Board has until July 31st to send its deficit elimination plan to the state.  

Lansing may end its relationship with St. Petersburg, Russia

The Lansing city council will be meeting tonight to discuss its sister city relationship with St. Petersburg, Russia. St. Petersburg recently passed an anti-gay ordinance and police there arrested people at an LGBT rally. Members say they want to send a message to St. Petersburg officials by canceling Lansing’s two decade sister cities relationship with the city.

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