Detroit bankruptcy

Detroit Skyline
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This Week in Review Rina Miller and Jack Lessenberry discuss next week's elections, the Detroit bankruptcy eligibility trial and the accusation by a Senator from Oklahoma that Isle Royale is wasting money and is not worthy of preservation.

Bob Jagendorf / Flickr

This week, Judge Steven Rhodes has been hearing testimony to decide whether Detroit is eligible for Chapter 9 bankruptcy protection. Both Governor Rick Snyder and Detroit Emergency Manager Kevyn Orr have testified in the case. Michigan Radio’s Sarah Cwiek has been covering the hearings and she joins us to talk about the atmosphere in the courtroom.

Listen to the full interview above.

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Both Detroit Emergency Manager Kevyn Orr and Governor Snyder testified this week in the trial that will decide whether Detroit is eligible for Chapter 9 bankruptcy protection.

Facing hours of pointed questions from lawyers for city unions, retirees, and pension funds, both Snyder and Orr said that bankruptcy wasn’t a foregone conclusion for Detroit.

But both also insisted the city was clearly insolvent, creditor talks had broken down into multiple lawsuits, and Orr had to move quickly.

“It was somewhat shocking how dire it was,” Orr testified.

This week, Bankruptcy Judge Steven Rhodes is hearing arguments on whether the city of Detroit is eligible for Chapter 9 bankruptcy protection. Both Governor Snyder and Detroit Emergency Manger Kevyn Orr have testified. They argue that bankruptcy is Detroit’s only path to solvency.

John Pottow weighed in on the matter on today's Stateside program. Pottow is professor of law at the University of Michigan who specializes in bankruptcy and consumer protection.

"I think the hardest issue about this is this Michigan constitutional provision about protecting the pensions," Pottow said. "This gets to what's animating the objectors and the unions is, why would the governor want to rush Detroit into bankruptcy? It's not what people generally clamor toward. And their concern is that because of this protection the workers have under the state constitution, that the governor might be trying to use the federal bankruptcy law as a way to get around the Michigan constitution."

Listen to the full interview above.

screen grab / NBC Video

It's Day 5 of the Detroit bankruptcy trial and the man at the center of the bankruptcy filing took the stand for the third time.

Detroit Emergency Manager Kevyn Orr filed the bankruptcy paperwork with the court last July.

Now Bankruptcy Judge Steven Rhodes will decide whether the city can be protected from creditors by entering into Chapter 9 bankruptcy. He's expected to make his decision sometime in mid-November.

Joy VanBuhler / Flickr

U.S. Bankruptcy Judge Steven Rhodes is presiding over the fourth day of testimony in the Detroit bankruptcy case.

At issue...

  1. Is it true that Detroit can no longer pay its bills?
  2. Did city leaders negotiate with creditors "in good faith" before filing for bankruptcy protection?

Two of the main players in the bankruptcy filing are in court today.

Detroit's state-appointed emergency manager Kevyn Orr took the stand last Friday and again this morning.

Detroit Skyline
Dave Linabury / Flickr

With the bankruptcy trial in full swing, we thought we'd share the following facts with you about the Detroit bankruptcy case.

 

  • State declares Detroit is in a “financial emergency” on March 1, 2013

  • Kevyn Orr appointed as Detroit’s emergency manager on March 14, 2013

  • City files for Chapter 9 bankruptcy on July 18, 2013

Steve Carmody/Michigan Radio

DETROIT (AP) - The Detroit City Council has decided not to push an alternative to a $350 million loan designed to help the city pay off some of its massive pension debt.

Council members on Friday discussed the competing plan to the post-bankruptcy petition financial proposal engineered by state-appointed emergency manager Kevyn Orr.

About $230 million from Barclays would be used to fully pay off a complicated pension debt deal involving two major creditors. The rest would be used to improve basic city services.

Gerri Trager / Flickr

Update 4:25 p.m.

Emergency manager Kevyn Orr has taken the stand in Detroit bankruptcy eligibility trial, for what's likely to be a brief bit of testimony before court breaks for the weekend.

The court confirmed that Governor Snyder will take the stand at 1 p.m. on Monday, regardless of whether Orr is finished testifying.

Orr follows Detroit Police Chief James Craig, who testified about the poor state of police service in Detroit when he took over the job in July 2013.

He called Detroit "the most violent city I've ever worked in" (he's also worked for police departments in Los Angeles and Cincinnati).

He said the city needs to take "bold action" to rectify its fiscal problems, but acknowledged he was "concerned" about "hiring and retention issues" if Detroit is allowed to slash pension benefits in bankruptcy.

1:11 p.m.

At issue is whether the state (mostly Gov. Rick Snyder) and city​ leaders (mostly Kevyn Orr) truly negotiated "in good faith" with Detroit's creditors.

Those who stand to lose a lot (city union workers and retired pensioners, among many others) are arguing that bankruptcy was the goal all along - that there was no "good faith" bargaining going on.

We're in Day 3 of hearings in front of the man who will ultimately decide whether Detroit will become the largest city in U.S. history to go bankrupt.

We're not expected to get a ruling from U.S. Bankruptcy Judge Steven Rhodes until mid-November.

This morning there was testimony from Kenneth Buckfire, an investment banker who worked with the city of Detroit. Buckfire was questioned about the timing of his negotiations with Gov. Snyder and the city over the city's insolvency.

A new study found that students enrolled in online charter schools are not performing as well as students in traditional brick and mortar schools. At the same time the number of virtual schools is growing. On today's show, we talked about the big business of online charter schools.

And, how do you talk about being gay and Christian? And how should we be talking about it? We spoke to the founder of the Gay Christian Network to learn more.

And, could eating local save energy and help the planet? We took a closer look at the impact of the local food movement.

Also, Jen Guerra from Michigan Radio’s State of Opportunity project joined us to give a preview of her upcoming documentary, “The Education Gap.”

First on the show, is Detroit really broke?

That’s the question before Federal Bankruptcy Judge Steven Rhodes as Detroit’s bankruptcy eligibility trial began today. His ruling could open the door for the City of Detroit blowing up billions of dollars in debt and liabilities.

As has been the case ever since the bankruptcy filing on July 18th, this is all being closely watched from coast to coast. History is being written in Judge Rhodes' courtroom.

Daniel Howes, Detroit News Business Columnist, and the former Chief of Communications for the City of Detroit, Karen Dumas, joined us today to talk about what this trial means and what we might see.

Peter Martorano / Flickr

Is Detroit really broke?

That’s the question before Federal Bankruptcy Judge Steven Rhodes as Detroit’s bankruptcy eligibility trial began today. His ruling could open the door for the City of Detroit blowing up billions of dollars in debt and liabilities.

As has been the case ever since the bankruptcy filing on July 18th, this is all being closely watched from coast to coast. History is being written in Judge Rhodes' courtroom.

Daniel Howes, Detroit News Business Columnist, and the former Chief of Communications for the City of Detroit, Karen Dumas, joined us today to talk about what this trial means and what we might see.

Listen to the full interview above.

Gerald Rosen, the bankruptcy judge in charge of mediation, issed the order today.
Detroit Legal News

Detroit is NOT in bankruptcy. Not yet, anyway.

That's what the bankruptcy hearing, which started today, is all about.

The federal bankruptcy judge will decide whether the city is allowed to protect itself from close to 100,000 creditors under Chapter 9 bankruptcy laws.

We found out this morning that Michigan Gov. Rick Snyder, the man who ultimately signed off on Detroit's bankruptcy filing, will testify in the Detroit bankruptcy trial on Monday.

Unions had served Snyder with a subpoena, but his live testimony appeared to be an unsettled issue earlier this week.

Gov. Snyder's lawyer argued that the Snyder's recent three-hour deposition should be enough.

But now his counsel says the governor wants to cooperate and will be available Monday afternoon.

Unions and pension funds want to question Snyder about approving Detroit's bankruptcy filing in July as well as other issues related to the case.

They will try to prove to the bankruptcy judge that Gov. Snyder and Detroit's emergency manager Kevyn Orr had bankruptcy in mind all along - that they did not negotiate in good faith with the creditors ahead of time.

Michigan Radio's Sarah Cwiek is live tweeting from today's hearing. Lawyers for the city have already argued in favor of bankruptcy this morning. Now it's time for those opposed to bankruptcy to argue. Here's how Cwiek sums up what their arguments will be:

 

 

Well, today is the day that the City of Detroit goes to court. Bankruptcy court, that is. Not to settle the final details of what will happen, but to ask the judge to allow it to declare bankruptcy.

This has been going on so long now that there’s a tendency to take Detroit bankruptcy as an established fact. In fact, all that has happened is that the Emergency Manager, Kevyn Orr, filed a petition in July asking to be allowed to declare bankruptcy. Since then, we’ve been treated to a long series of revelations that make bankruptcy appear the only option.

Detroit has close to $20 billion dollars in unfunded liabilities, and next to no assets. It wouldn’t make much of a dent if they sold the entire collection of the Detroit Institute of Arts, and then sold the building to a billionaire who wanted a mausoleum.

Bob Jagendorf / Flickr

In this Week in Michigan Politics, Christina Shockley and Jack Lessenberry discuss Detroit's bankruptcy eligibility trial, Governor Snyder's NERD fund, and new proposed fracking rules.

A trial to determine Detroit’s fate in municipal bankruptcy starts Wednesday.

Judge Steven Rhodes will hear arguments from city lawyers about why Detroit qualifies for Chapter 9 protection.

University of Michigan law professor and bankruptcy expert John Pottow says some city creditors will argue that Detroit’s bankruptcy filing was pre-determined--and there was no good-faith bargaining process, as the federal bankruptcy code requires.

User: Brother O'Mara / flickr

Bankruptcy eligibility trial begins today

"A trial to determine Detroit’s fate in municipal bankruptcy starts today. Judge Steven Rhodes will hear arguments about whether the city qualifies for Chapter Nine protection," Sarah Cwiek reports.

Judge says Detroit EM candidate names  should be revealed

"A Wayne County judge has ruled that state officials must turn over a list of possible candidates for the Detroit emergency manager job," Cwiek reports. This comes after a union activist filed a lawsuit saying the state violated the Open Meeting Act when it appointed Detroit's emergency manager Kevyn Orr.

DEQ proposes new rules for fracking

The Department of Environmental Quality has proposed new rules for fracking in Michigan. "The rules will require disclosure of chemicals used by developers, and make it easier for people to track where “fracking” is occurring," Rick Pluta reports

State officials must turn over the names of all candidates considered for Detroit’s emergency manager job.

A Wayne County Circuit judge court ordered that information be made public Tuesday.

User: Brother O'Mara / Flickr

Gov. Snyder shuts down NERD fund

"Governor Rick Snyder’s controversial NERD Fund will be shut down this week and replaced. Its official name is the New Energy to Reinvent and Diversify Fund. Governor Snyder used the fund to pick up costs he says should not be paid by taxpayers," Rick Pluta reports.

Highland Park could have an Emergency Manager soon

A state board has determined that the city of Highland Park has probable financial distress. Gov. Rick Snyder will next appoint a review team which could lead to an appointment of an emergency manager. According the Associated Press, "The Local Emergency Financial Assistance Loan Board also determined there is no probable financial distress in Ecorse Public Schools. A similar hearing is scheduled Wednesday for Royal Oak Township."

Detroit City Council rejects loan deal from EM

"The Detroit City Council has rejected a proposed $350 million loan deal. Emergency manager Kevyn Orr . . . planned to use most of the $ 350 million to pay off two banks. That’s controversial because he’s proposed much steeper cuts for other Detroit creditors. Bankruptcy court Judge Steven Rhodes will have to sign off on the deal," Sarah Cwiek reports.

The Detroit City Council has rejected a $350 million loan deal secured by Emergency Manager Kevyn Orr.

Orr announced the deal with the British financial giant Barclays earlier this month.

The plan was to use most of the money—about $230 million—to pay off two banks who profited from a bad interest rate swaps deal Detroit made on some pension debt years ago.

Steve Carmody/Michigan Radio

DETROIT (AP) - Convincing executives that Detroit is a comeback city where they should hold meetings and conventions can only be characterized as the most monumental of pitches or the slickest of con jobs.

Convention and visitors bureau marketing chief Bill Bohde says they are plowing forward with a $1.6 million campaign touting it as a great comeback city even after Detroit became the largest U.S. city to seek bankruptcy protection.

Detroit Free Press video / Detroit Free Press

    

Today, we’re checking in with Detroit News business columnist Daniel Howes, discussing what’s going on with the Detroit bankruptcy trial.

According to Howes, two phrases for us to consider this week are “status quo” and “collateral damage.”

How has the status quo failed? And what collateral damage would happen if Judge Steven Rhodes approves the Chapter 9 petition?

Listen to the full interview above. 

User: Brother O'Mara / Flickr

Judge delays decision on same-sex marriage

"A federal judge in Detroit will hold a trial before deciding whether to uphold or strike down Michigan’s ban on same-sex marriage. Judge Bernard Friedman declined to rule yesterday [Wed.] because he wants to get more facts. The challenge was brought by a lesbian couple in Oakland County who want to jointly adopt the special needs kids they’re raising together," Rick Pluta reports.

Detroit bankruptcy hearings begin

"Michigan’s emergency manager law took center stage at a hearing in Detroit’s bankruptcy case yesterday. The court is holding hearings on whether Detroit is even eligible to file for bankruptcy. A formal trial is set for next week," Sarah Cwiek reports.

Bill would end unemployment benefits if a person fails a drug test

"A state Senate panel has approved a bill that would revoke unemployment benefits if a person fails a drug test as part of a job search. The bill now goes to the full state Senate," Jack Neher reports.

Sarah Cwiek / Michigan Radio

Detroit’s chief financial officer, Jim Bonsall, has resigned.

Bonsall had only been on the job since mid-July. He was brought in by Detroit emergency manager Kevyn Orr, after lobbying for the job through Governor Snyder’s office.

But Bonsall’s management style alienated some. And he came under investigation after a recently-demoted city employee reported racially-charged comments he made at a meeting.

Bob Jagendorf / Flickr

This week in review, Rina Miller and Jack Lessenberry discuss Governor Snyder's testimony regarding the Detroit bankruptcy filing, the governor's NERD fund, and the sentencing of former Detroit mayor, Kwame Kilpatrick.

The interview can be heard below


Sarah Cwiek / Michigan Radio

The city of Detroit will borrow $350 million to help it through bankruptcy and restructuring.

Emergency manager Kevyn Orr announced the deal with the British financial giant Barclays Friday.

Detroit’s new chief financial officer has been suspended.

The city’s former finance director, Cheryl Johnson, has accused Jim Bonsall of creating a hostile work environment, particularly for black women.

Well, it has been an odd and remarkable week in an odd and remarkable year. Large parts of the federal government are still shut down, and Detroit’s march towards bankruptcy is still proceeding, agonizingly slowly.

Yesterday, however, there was a flurry of good news, most from poor beleaguered Motown itself. The city’s thoroughly corrupt former mayor was sentenced to a record stretch in federal prison.

Governor Rick Snyder's website

This week, Gov. Rick Snyder became the state’s first sitting governor to testify under oath in a case.

On Wednesday, Snyder sat through more than three hours of questioning surrounding the Detroit bankruptcy case. Today brought depositions from State Treasurer Andy Dillon and top Snyder advisor Richard Baird.

Detroit News business columnist Daniel Howes recaps what’s happening in the case, and whether we can expect to see the governor called in to testify in the bankruptcy court trial, which begins on Oct. 23.

Listen to full interview above. 

YouTube

"You were not really committed to working this problem out with me."

That's what Detroit union employees and retirees are saying about Michigan Governor Rick Snyder. They say he was working toward a bankruptcy filing for Detroit all along, and did not negotiate with them "in good faith."

It's a central argument in a court case attempting to stop approval of a Detroit bankruptcy. If it can be proven that the city or the state did not argue in good faith with creditors, it could be a reason to deny Chapter 9 bankruptcy for the city of Detroit. 

User: Brother O'Mara / flickr

Bars could stay open until 4 am

“Legislation at the state Capitol would let downtown bars and restaurants sell alcohol until 4 am. Michigan’s liquor code generally bans alcohol sales between 2 am and 7 am,” Jake Neher reports.

Detroit EM talks DIA assets

“Detroit's state-appointed emergency manager Kevyn Orr says the Christie's auction house will finish an assessment of city-owned pieces at the Detroit Institute of Arts this month, and he defends including their possible sale in the city's bankruptcy process,” the Associated Press reports.

State rejects private prison

“Michigan has rejected allowing a privately run, for-profit prison to house about a thousand inmates. The state turned down two bids because there was no savings for taxpayers,” Rick Pluta reports.

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