Detroit bankruptcy

Law
8:12 pm
Mon October 27, 2014

Detroit's bankruptcy trial is over; judge to rule on restructuring plan November 7th

Detroit’s bankruptcy trial wrapped up Monday with closing arguments.

At issue: whether the city’s plan of adjustment to restructure its debt is “fair and equitable” to its various creditors, as required by Chapter 9 of the municipal bankruptcy code.

Judge Steven Rhodes must also decide if the plan is “feasible”—whether Detroit can balance its books and avoid slipping back into bankruptcy.

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Law
6:00 am
Wed October 22, 2014

Orr testifies again in Detroit bankruptcy trial; city reveals plan to sell lighting scrap metal

Kevyn Orr
Credit City of Detroit

Detroit emergency manager Kevyn Orr took the stand again Tuesday in the 22nd day of the city’s bankruptcy trial.

Orr testified mostly about Detroit’s recent settlement with bond insurer Financial Guaranty Insurance Corporation. That deal is outlined in a draft of the ninth version of Detroit’s plan of adjustment (the city’s proposal to “adjust” its debts in bankruptcy court).

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Detroit bankruptcy
12:15 pm
Mon October 20, 2014

Judge to rule on Detroit's final bankruptcy plan in early November

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

During a brief hearing this morning in U.S. bankruptcy court, Judge Steven Rhodes declared his intention to make a final ruling on Detroit's plan to get out of bankruptcy.

Rhodes said he'll make his decision during the first week of November.

His announcement comes after the city announced that it had reached a deal with one of its last remaining major creditors. The Financial Guaranty Insurance Company will no longer oppose Detroit's plan to exit bankruptcy under the terms of a deal reached at 2:30 in the morning last week.

FGIC, which stood to lose $1.1 billion, agreed to terms that gives the company the right to develop the area where the Joe Louis Arena and parking garage now stand. The deal also gave them millions of dollars in credits for future purchases and city notes.

Rod Meloni of WDIV-TV was in court this morning live-blogging. He wrote about what we can expect next for the days remaining in Detroit's bankruptcy trial:

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Politics & Government
6:00 am
Sat October 18, 2014

Big names campaign in Michigan, Detroit clears a bankruptcy court hurdle and GM global sales shine

The Detroit Institute of Arts. The DIA's collection is safe from being sold after Detroit struck a deal with the last major holdout in its bankruptcy trial this week.
Credit Flickr

This Week in Review, Jack Lessenberry and Rina Miller discuss big name politicians stopping in Michigan to campaign for local candidates, the latest development in Detroit’s bankruptcy trial, and GM’s record global sales despite a dismal week on Wall Street.


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Opinion
11:13 am
Fri October 17, 2014

Reflecting on the road to a final settlement of Detroit’s bankruptcy

When you look back at the long history of Detroit, yesterday may not have been quite as significant as July 24, 1701.

That was the day Cadillac and his men beached their canoes, scrambled up the riverbank near where the Cobo Center now stands, and started building a fort. But yesterday comes somewhat close.

Yesterday was the day the last major holdout creditor came to terms with the city, in a way that should help improve the city’s chances to make it after the bankruptcy process ends.

This also seems to remove the last threat facing the Detroit Institute of Arts. Financial Guaranty Insurance Company will get the land where Joe Louis Arena now sits, the place where the Red Wings play and where, 34 years ago, I saw Ronald Reagan nominated for President. Eventually, when a new hockey arena opens, this will be torn down and a gleaming new luxury riverfront hotel built here, surrounded by condos and some new retail.

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Law
7:59 pm
Thu October 16, 2014

Detroit reaches settlement with last major objecting creditor in bankruptcy

Under the terms of the settlement, FGIC would get the right to redevelop the site where Joe Louis Arena now stands. Demolition is scheduled for 2017.
Credit Wikipedia

Detroit has reached a settlement with its last major holdout creditor in bankruptcy court.

Bond insurer Financial Guaranty Insurance Corporation holds $1.1 billion in Detroit debt. It insured a bad deal on city pension debt whose legality has been questioned.

FGIC had been the city’s last big foe in bankruptcy court. By signing onto the plan of adjustment Detroit has proposed to restructure its debts, it’s removed another hurdle slowing down the city’s exit from bankruptcy.

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Law
6:00 am
Wed October 15, 2014

Detroit bankruptcy trial resumes; final major settlement expected this week

After a week-long recess, Detroit’s bankruptcy trial resumed Tuesday.

City lawyers spent more than two weeks making their case for Detroit’s proposed plan of adjustment to restructure its debts in bankruptcy. They rested last week.

Now, objecting creditors get their chance to argue that plan doesn’t meet the requirements of the municipal bankruptcy code.

Laura Bartell, a professor of bankruptcy law at Wayne State University, said the trial has gone “swimmingly” for the city so far.

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Opinion
10:56 am
Fri October 10, 2014

Facing criticism of pay hikes, DIA's mistake was turning deaf ears to the real world

If you love the Detroit Institute of Arts, and supported the “Grand Bargain” to save it, then you should be grateful that what surfaced this week wasn’t known a few months ago.

Specifically, the whopping raises and bonuses paid to Graham Beal, the director of the DIA, and Annmarie Erickson, the museum’s executive vice president and chief operating officer.

Two years ago, Beal, whose compensation is over half a million dollars a year, got a 13% raise. Erickson, who got a promotion and new responsibilities, got a 36% raise.

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Stateside
8:29 pm
Wed October 8, 2014

Why DIA valuations have varied so wildly

Rivera Court-Detroit Institute of Art
Credit Trish P. / Flickr

All through the Detroit bankruptcy trial, the spotlight has been fixed on the Detroit Institute of Arts.

It has become one of the most contentious and confusing issues in the bankruptcy, as the appraisals of the DIA’s treasures have been wildly different. The city’s appraisal by Christie’s came in at just over $800 million, while an appraisal done by noted expert Victor Wiener pegs the value at more than $8 billion.

Beverly Jacoby is a noted art valuation expert who recently had an op-ed piece in the Detroit Free Press. She's the founder and president of BSJ Fine Art in New York.

Jacoby says there are several reasons for the wildly different values. Jacoby says an appraisal can vary depending on the party that commissions it. “A key issue with any appraisal is the appraiser is hired by a party and that party is the intended user," she says.  

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Law
6:00 am
Tue October 7, 2014

Duggan, Jones take the stand in Detroit bankrutpcy trial; court adjourned until next week

The city of Detroit wrapped up its case in bankruptcy court today, with Detroit’s two top elected officials as the final witnesses.

Mayor Mike Duggan and City Council President Brenda Jones both took the stand.

Their testimony is key, because the city needs to convince Judge Steven Rhodes that its proposed plan of adjustment is feasible—and that city leaders will work together to execute it post-bankruptcy.

Jones had publicly opposed emergency manager Kevyn Orr, and his decision to file for bankruptcy.

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Politics & Government
8:35 am
Sat October 4, 2014

Mitt Romney visits Michigan, Dan Gilbert takes the stand and Ferndale police deny racial profiling

Mitt Romney was in Livonia this week to campaign for GOP U.S. Senate candidate Terri Lynn Land.
Credit (courtesy of MittRomneyCentral.com)

This Week in Review, Jack Lessenberry and Rina Miller discuss Mitt Romney’s recent Michigan visit, billionaire businessman Dan Gilbert’s testimony in Detroit’s bankruptcy trial and allegations that Ferndale police are issuing a disproportionate number of tickets to black drivers. 

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Law
6:00 am
Thu October 2, 2014

Kevyn Orr, Dan Gilbert take the stand in Detroit's bankruptcy trial

Credit Sam Beebe

Detroit emergency manager Kevyn Orr will continue testifying today in Detroit’s bankruptcy trial.

Orr, a bankruptcy lawyer, took the stand for the first time Wednesday afternoon. He’s the main architect of Detroit’s bankruptcy restructuring plan, formally known as a plan of adjustment.

That plan is ultimately what’s on trial; Judge Steven Rhodes needs to approve it for the city to emerge from bankruptcy.

But while Orr is a crucial witness for the city, there was nothing particularly new or noteworthy about his initial testimony.

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Breaking
5:51 pm
Thu September 25, 2014

Detroit leaders vote to keep Kevyn Orr on as EM, limit his powers

Credit State of Michigan

As of Friday morning Detroit’s elected officials are back in charge of city operations—but Kevyn Orr is still technically the city’s emergency manager.

That’s because Detroit officials have approved a deal stripping Orr of most of his powers.

In the deal approved by the City Council and Mayor Mike Duggan Thursday, Orr will stay on as emergency manager until Detroit exits bankruptcy.

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Politics & Government
2:00 pm
Thu September 25, 2014

The 18-month clock has just about expired for Detroit emergency manager Kevyn Orr

Detroit Emergency Manager Kevyn Orr speaking at the University of Michigan.
U of M

After voters rejected the state's old emergency manager law in November 2012, Michigan lawmakers quickly came up with a replacement.

State-appointed emergency managers could still take control over local governments and school boards, but under the new law, they could do so for a limited amount of time. 

The new law, Public Act 436, allows for local governments to end a state-appointed emergency manager's term after 18 months. From the law:

If the emergency manager has served for at least 18 months after his or her appointment under this act, the emergency manager may, by resolution, be removed by a 2/3 vote of the governing body of the local government. If the local government has a strong mayor, the resolution requires strong mayor approval before the emergency manager may be removed. 

Orr started work as Detroit's emergency manager on March 28, 2013, so his 18 months is up in the next few days.

Almost everyone thought Detroit City Council and Mayor Duggan would vote to end Orr's appointment, but with Detroit's bankruptcy process wrapping up in court, the talk has changed.

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Politics & Government
4:53 pm
Wed September 24, 2014

Detroit leaders, Kevyn Orr continue closed-door talks

Kevyn Orr
Credit Sarah Cwiek / Michigan Radio

Detroit emergency manager Kevyn Orr has joined private, ongoing talks between Mayor Mike Duggan and the Detroit City Council about his future.

Under Michigan’s emergency manager law, the City Council could vote to remove Orr this week – but only if Duggan and Gov. Rick Snyder agree.

The parties have been meeting in closed session since Tuesday to discuss a transition plan. No one has been willing to speak publicly about those discussions.

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Law
3:38 pm
Tue September 23, 2014

Second day of testimony on Detroit water shutoffs; judge will rule on moratorium Monday

Judge Steven Rhodes said he'll rule next Monday whether to put a temporary halt to Detroit's controversial water shutoffs.

Witness testimony continued in federal bankruptcy court Tuesday with hearings to determine the fate of that policy.

A coalition of Detroit residents and advocacy groups filed a lawsuit challenging the city’s controversial shutoff policy on constitutional and civil rights grounds.

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Economy
2:51 pm
Tue September 23, 2014

Detroit hires company to reappraise real estate

Col. Frank J. Hecker House in Detroit
Credit User: Werewombat / Wikimedia Commons

DETROIT - A Plano, Texas, company has been hired to give Detroit a clear picture of how much individual properties in the city are worth.

Tyler Technologies Inc. says its appraisal arm will compile data on real property in the city. It says Detroit has not completed a full reappraisal of real property in more than 50 years.

A spokesman for emergency manager Kevyn Orr says Tyler's CLT Appraisal Services unit will give the city a "more accurate assessment of property values." Bill Nowling says the city will use it to "create more accurate property tax bills."

Mayor Mike Duggan said earlier this year that the city would lower property tax bills by reassessing home values. He says high, unrealistic property assessments have angered city residents and forced many from their homes.

Politics & Government
11:57 am
Wed September 17, 2014

The week in Michigan politics

Credit Lester Graham / Michigan Radio

This Week in Michigan Politics, Emily Fox and Jack Lessenberry discuss the possibility of new teachers losing their pensions, the latest in the Detroit bankruptcy trial, and how Aramark is under fire again.


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Opinion
10:46 am
Tue September 16, 2014

Detroit’s bankruptcy settlement is far from the end of the story

Many years ago, I met Thomas Friedman, the distinguished New York Times journalist who won two Pulitzer Prizes for his coverage of the Middle East by the time he was 35.

When I told him that I regarded his reporting as indispensable, he told me something I’ll never forget. He said “don’t read my stories every day.”  That startled me, and I asked what he meant.

He went on: “Daily journalists covering a beat have to produce a story just about every day.” That’s partly because everybody doesn’t always read everything. But if you look closely, you’ll see that much of the time, much of the daily stories are repetitious.

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Stateside
7:49 pm
Mon September 15, 2014

DIA director talks about Detroit bankruptcy battle

Bank of the Oise at Auvers by Van Gogh, owned by the DIA
Credit user: Maia C / Flickr

 

As the Detroit bankruptcy trial moves into its third week, the spotlight has often been trained on the Detroit Institute of Arts.

The discussion over whether the DIA can and should be forced to sell its treasures to help offset Detroit's insolvency has been one of the most hotly debated issues of the bankruptcy.

DIA director Graham Beal recently wrote a letter that was published in the museum's newsletter and then posted on Deadline Detroit under the headline "Museums Should Step Very Carefully 'In Times Of Crisis.'"

Here's an excerpt of the letter:

In the Great Depression, the DIA remained open and staffed, largely thanks to the secret support of Edsel Ford. The city of Detroit arts commissioners could have sold the van Gogh self-portrait, Matisse's The Window, Ruisdael's Jewish Cemetery, or even Breugel's Wedding Dance, but the thought never seems to have crossed anyone's mind.

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