Detroit Journalism Cooperative

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.

Read more
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.

Read more
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.

Read more
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.

Read more
Opinion
11:05 am
Tue September 30, 2014

Judge’s ruling doesn’t mean he was unsympathetic to those facing water shutoffs

I once knew an opinion pollster who told me he could usually determine how anyone was going to vote without ever asking who they were going to vote for.

He did this by asking a series of litmus-test type questions about someone’s life, background and beliefs.

If you were a single mom with limited income, for example, that probably indicated you were a Democrat – unless you were a fundamentalist Christian. White professional male with a six-figure income?  Likely Republican if in business, for example. But probably not if he is a nonreligious professor.

Read more
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.

Read more
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.

Read more
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.

Read more
Investigative
7:00 am
Mon September 15, 2014

After Detroit bankruptcy, is there enough money?

Monument to Joe Louis in downtown Detroit.
Credit user memories_by_mike / Flickr

The pieces are falling into place for Detroit to eventually emerge from bankruptcy with a lot less of its budget-servicing debt. But the city of Detroit’s budget could still be a house of cards. Many of its revenue sources are not stable.

Bankruptcy does not mean Detroit escapes all of its money problems.

It’s heavily dependent on a city income tax. If another economic dip is around the corner, that source of revenue would shrink.

Casino taxes are stagnant.

Read more
Politics & Government
10:19 am
Wed September 10, 2014

Detroit's new bankruptcy deal worth 26 cents on the dollar, up from 10 cents

Detroit's riverfront.
Ian Freimuth Flickr

Judge Steven Rhodes has suspended Detroit's bankruptcy trial until Monday so the city can work out details of a deal with one of its major creditors.

News of the potential deal broke last night. Syncora, a bond insurer, stands to lose $400 million in Detroit's bankruptcy.

Alisa Priddle of the Detroit Free Press reports the deal the city is trying to work out with Syncora would be worth 26 cents on the dollar vs. 10 cents on the dollar under the city's current plan.

More from the Freep:

Among the goodies are $23.5 million in payment in the form of B-notes; a long-term lease on a centrally located parking garage; a 20-year extension of the lease to run the U.S. side of the Detroit-Windsor Tunnel to 2040; and $6.2 million in credits towards the purchase of some parcels of land in the future.

The pause in the trial also gives the city time to reach other settlements with other creditors. One of the biggest is Financial Guaranty Insurance Co.

FGIC insured a deal made under the Kwame Kilpatrick administration that shored up the city's pension liabilities.

Here's how that deal was described by the Freep last spring:

Under former Mayor Kwame Kilpatrick, Detroit sold the pension obligation certificates of participation to boost funding at the city’s General Retirement System and Police and Fire Retirement System to nearly 100%. The city also bought so-called swaps, or derivatives, to permanently lock in steady interest rates around 6% on the arrangement. But three years later, as the national economy tanked, interest rates plummeted, souring the deal.

Robert Snell and Christine Ferretti of the Detroit News spoke with one of Syncora's lawyers, Ryan Bennett.

Bennett said the deal before Syncora now relies on the city settling its issue with FGIC. 

Bennett said he’s not aware of any deals in the works between the city and FGIC. But the holdout creditor could benefit as well from the “shared asset pool” and that Syncora’s tentative agreement “sets a path” for FGIC, he said.

The Freep's Priddle reports that an FGIC lawyer said they need to "better understand the deal" and it will affect the witnesses he calls when the bankruptcy trial resumes next week.

*This post has been updated.

Law
9:47 pm
Tue September 9, 2014

In bankruptcy breakthrough, Detroit reaches deal with its fiercest creditor foe

Detroit has hammered out a deal with its fiercest foe in bankruptcy court, possibly smoothing the way for the city to leave bankruptcy quickly.

Bond insurer Syncora Guarantee, Inc. had fought the city’s proposed plan of adjustment at every turn.

That restructuring plan would have forced the company to take hundreds of millions of dollars in losses.

Read more
Politics & Government
11:36 am
Wed September 3, 2014

Jack Lessenberry gets us up to speed on the Detroit bankruptcy trial

Credit user andrea44 / Flickr

This Week in Michigan Politics, Jack Lessenberry gives an overview of what's at stake in Detroit's bankruptcy trial.


Opinion
10:33 am
Tue September 2, 2014

Detroit's trial of the century begins, and the outcome is anything but certain

Detroit’s bankruptcy has been with us so long that it is hard to believe that the actual trial is only starting today.

Technically, it is not a trial in the strict sense of the word, but something called a “plan confirmation hearing.”

But it is, in a very real sense, Detroit’s trial of the century. That’s an overused phrase, but totally appropriate here.

In fact, U.S. Bankruptcy Judge Steven Rhodes, the most important figure in all of this, said it all last week: What happens here will determine “the future of the city of Detroit.”

Actually, it might be technically correct to say that this trial will determine whether the city has a future.

Read more
Politics & Government
9:41 am
Tue September 2, 2014

Detroit Bankruptcy Battle Begins In Federal Court

The murals by Diego Rivera and other works at the Detroit Institute of Arts would be safe from creditors under the plan before a bankruptcy judge Tuesday.
Carlos Osorio AP

Originally published on Tue September 2, 2014 10:04 am

Detroit's historic bankruptcy case is entering the home stretch. The crucial, final trial phase begins Tuesday in a Detroit courtroom.

The trial will decide the fate of a plan to wipe out billions of dollars in debt and help Detroit emerge from bankruptcy as a new, revitalized city.

This trial is a big deal, but don't expect anything with lots of courtroom drama. For one thing, it's federal bankruptcy court — and there's no jury.

Read more
Politics & Government
5:31 pm
Fri August 29, 2014

Filings in Detroit's bankruptcy are getting personal

Turns out federal judge Stephen Rhodes can write a piece of legal smack down when he wants.
Credit 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.

Read more
Stateside
4:44 pm
Wed August 20, 2014

Will Detroit be able to pay its bills after bankruptcy?

Credit JSFauxtaugraphy/Flickr

Bridge Magazine writer Mike Wilkinson recently wrote a piece that explored the dollars-and-cents of Detroit, post-bankruptcy and beyond.

It's titled “Can Detroit Pay Its Bills Post-Bankruptcy?”

Wilkinson said though Detroit has been cash strapped for a while in terms of debt, it does generate a lot of money. It has the highest income tax and property tax in the state. It is the only city in the state allowed to levy a utility tax. And it has an averaged $179 million in casino taxes.

“It’s raising more money than Cincinnati, Chicago, Kansas City, Orlando, in terms of per person,” Wilkinson said.

Assuming that Kevyn Orr’s Plan of Adjustment is approved by Judge Rhodes, will this revenue be enough to pay the bills? Wilkinson wrote in his piece, “Revenues alone do not a budget make.”

And Eric Scorsone, an MSU professor and expert on city finances, said in order to answer that question, we must ask what will Detroit spend the money on?

“The truth is it would be very easy to overspend again as Detroit has in most of its history, and that’s going to be the real challenge for the political leadership of Detroit.” Scorsone said.

Read more
Law
6:47 pm
Tue July 22, 2014

Detroit retirees said "yes" to the city's bankruptcy restructuring plan. What's next?

Detroit retirees voted overwhelmingly to approve emergency manager Kevyn Orr's plan of adjustment.

That plan includes the unprecedented "grand bargain"--a mixture of public and private funds that will minimize cuts to city pensions, while protecting the Detroit Institute of Arts' assets from other city creditors.

But retirees aren't the only group of creditors who voted on the plan. Other groups did as well--and not all voted "yes."

Read more
Law
6:00 am
Mon July 21, 2014

We should learn whether Detroit retirees approved the "grand bargain" today

We should know how Detroit retirees voted on the proposed “grand bargain” later today.

City pensioners had until July 11th to vote on the city’s bankruptcy restructuring plan, formally known as the “plan of adjustment.”

The grand bargain is just one part of that plan.

It would use more than $800 million in combined state and private foundation dollars to backstop city pension funds, minimizing retiree losses.

Read more
Politics & Government
11:02 am
Sat July 19, 2014

Civil rights groups want to meet with Detroit officials about water crisis

Civil rights groups are asking to meet with Detroit officials about a controversial water shut-off campaign.

The ACLU and the NAACP want to meet with Detroit Mayor Mike Duggan and Emergency Manager Kevyn Orr to find a “fair, humane, and meaningful review process,” which would include adequate notice and a hearing to determine whether individual water customers can’t or won’t pay their bills.

Read more
Detroit
10:16 am
Fri July 18, 2014

Historic government building in downtown Detroit to be sold to New York buyer

Old Wayne County Building in downtown Detroit.
Sean_Marshall Flickr

I know what you’re thinking.

This building that once housed Wayne County’s administrative office is perhaps "one of the nation’s finest surviving examples of Roman Baroque Revival architecture, with a blend of Beaux-Arts and some elements of the Neoclassical style."

I was thinking the exact same thing.

Well, I was really thinking it’s a beautiful building in downtown Detroit and I hope it gets some attention.

Read more

Pages