The city of Detroit filed the largest municipal bankruptcy case in U.S. history Thursday afternoon, culminating a decades-long slide that transformed the nation’s iconic industrial town into a model of urban decline crippled by population loss, a dwindling tax base and financial problems.
The 16-page petition was filed in U.S. Bankruptcy Court in Detroit.
Gov. Rick Snyder’s office was making plans this afternoon to hold a 10 a.m. Friday morning news conference at the Maccabees Building, 5057 Woodward in Midtown, according to his office. It’s the same location where the governor declared a financial emergency for Detroit on March 1.
Snyder authorized Emergency Manager Kevyn Orr to file bankruptcy under a law the Legislature passed in December that replaced the previous emergency manager law voted repealed last November.
The bankruptcy filing came minutes before Ingham County Circuit Judge Rosemarie Aquilina was set to hold an emergency hearing Thursday afternoon on a request for a temporary restraining order blocking Snyder from authorizing a bankruptcy filing.
“It was my intention to grant you your request completely,†Aquilina told lawyers for Detroit’s pension boards.
The judge did grant temporary restraining orders against Snyder and Orr taking further action in the bankruptcy proceedings.
Ronald King, an attorney representing the police/fire and general retirement pension systems, said he may file a motion Friday in the case seeking to require Orr, an officer of the state, to withdraw the bankruptcy filing.
After the hearing, King expressed frustration with the governor’s office after filing a motion for a temporary restraining order at 3:37 p.m. and giving Snyder’s attorney extra time to get to the downtown Lansing courthouse.
The bankruptcy case was filed at 4:06 p.m. and Aquilina convened the emergency hearing at 4:11 p.m.
“This was a race to the courthouse this afternoon and yet another example of (the Snyder administration) completely usurping the will of the people, ignoring the referendum in the fall and then flat-out racing to file bankruptcy protection so you can get out from the protection of (pensions),†King told reporters.
Aquilina was preparing to hear arguments Monday from retirees seeking to stop the bankruptcy filing, which produced an automatic stay of all pending litigation and capped a month of intense talks between Orr’s team and creditors, which largely have failed to restructure as much as $20 billion in debt and long-term liabilities.
Orr’s spokesman, Bill Nowling, could not be reached for comment. And state officials contacted by The News on Thursday declined to discuss the matter, though Snyder spokesman Jeff Holyfield confirmed the governor authorized the filing.
The Chapter 9 filing could take years, experts say, despite hopes by the governor and Orr that the case can be wrapped up in a year. A bankruptcy judge could trump the state constitution by slashing retiree pensions, ripping up contracts and paying creditors roughly a dime on the dollar for unsecured claims worth $11.45 billion.
During a month of negotiations, Orr has reached a settlement with only two creditors: Bank of America Corp. and UBS AG. They have agreed to accept 75 cents on the dollar for approximately $340 million in swaps liabilities, according to a source familiar with the deal.
The bankruptcy plan was expected to closely follow Orr’s restructuring proposal that was unveiled to creditors on June 14 — a proposal that drew criticism from some creditors who said the cuts were too deep and did not include the sale of city assets, including Belle Isle and a Detroit Institute of Arts collection worth billions. He proposed paying most of the money owed to secured creditors while pension funds, unions and unsecured bondholders would receive, in some cases, 10 cents on the dollar.
The filing is expected to trigger a costly, long and precedent-setting battle by creditors and Detroit’s bankruptcy case could become a template for the treatment of pensions in the largely uncharted world of municipal bankruptcies.
Unsecured creditors could take the biggest hit in bankruptcy court. Orr wants them to share a $2 billion payout on approximately $11.5 billion worth of debt, which includes an estimated $9.2 billion in health and pension benefits and $530 million in general-obligation bonds.
Instead of paying creditors in full, Orr would use $1.25 billion over the next decade to buy police cars and fire trucks, replace broken street lights, tear down burned-out homes, fight blight and improve city services.
Orr wants to stabilize the city, woo new residents, provide essential city services for Detroiters, lower property taxes and transfer costly departments, including the water department, to an outside group.
Once the nation’s fourth largest city, Detroit was hailed as an industrial hub with nearly 2 million people. Today, after a half-century of residential flight, high unemployment, a significant reduction in state funding, plummeting income and property taxes, corruption and chronic mismanagement, the bankruptcy filing solidifies the city’s standing as a model of urban decline.
The filing serves as a grim reminder of the bankruptcies that hit the auto industry four years ago. Unlike the cases of General Motors and Chrysler in 2009, the White House offered no financial help.
Snyder’s staff is making plans to explain the bankruptcy decision during appearances on Sunday morning talks shows, including “Face the Nation†and “Meet the Press,†according to one source.
The case was expected to be assigned by Alice Batchelder, chief judge of the 6th U.S. Circuit Court of Appeals, which spans Michigan, Ohio, Kentucky and Tennessee. Any judge in the four-state region could be assigned the case, though Batchelder will weigh potential political concerns and decide who has the time and capability to handle a complex, large case.
Some legal experts predict the case would be assigned to a judge from outside the city to avoid any potential conflicts of interest.
Source: The Detroit News
Detroit has had a succession of democrat mayors since January of 1962. During that time period two of those democrat mayors 1962-70 and 1970-74 were white. Since 1974 all of Detroit’s mayors have been black.
Fifty one (51) years of control by the democrat machine has bankrupted the city of Detroit. I doubt that the media, as it exists in this country today, will ever report the true amount of debt that is owed by the city of Detroit. It would be too devastating an indictment against the liberal socialist agenda to print the truth about the demise of Detroit.
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Ah yes, the classic teabagger oversimplification technique.
Ah, yes, the blithering, left-wing-nut idiot effect…
Pressanykey: It is totally ridiculous for you to comment on the race makeup of the various Detroit Mayors causing Detroit’s financial problems. I request the Editor take this race reference down.
Wayne Parke
Chairman Republican Party
Mr. Parke, you have completely lost your mind if you don’t see that your boy Winnecke is following his master Weinzapfel down the Detroit road to hell. Snap out of it dude. You used to be a logical pragmatic thinker until you got a Republican mayor elected. It is just a label. Winnecke is no more republican than Jesse Jackson.
Wayne Parke: How do you feel about racial quotas?
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Don’t answer that Wayne. I do not want to talk about racial makeup.
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Editor: I again ask that you remove Pressanykey on July 18, 2013 at 8:28 pm posting. The comment on the race make-up of Detroit’s Mayors is absolutely wrong. This kind of racial statement should not be permitted in your newspaper. It is very disappointing you have not already done so.
Please explain why you have not taken it down.
Wayne Parke
Chairman Vanderburgh County Republican Party
Here is a list of the mayors of Detroit with their pictures. The last republican left office in 1962 and there has not been one since. The post you refer to is accurate. We do not understand the message that the post was trying to infer but it was factual none the less. We do not see any reason to censor a post that has no profanity, threatens no one, and is factually correct.
http://en.wikipedia.org/wiki/List_of_mayors_of_Detroit
^5 editor.
When the truth can be replaced by whatever in the hell someone WANTS to believe, we all lose.
Especially you.
Mr. Parke’s comment may be from the heart, or it may be from a political stand point, but your response was kicka__.
Good answer. Sorry to say, race did play a factor in the destruction of Tiger Stadium. IIRC, one of the boards that initially approved TS being converted into condos, shops, and a museum had a ratio of Caucasian to African American members that wasn’t consistent with the city’s ratio of Caucasian to African American so the plan ended up getting over turned by a higher board which then led to the DECG following up with Mayor Kwame Kilpatrick’s desire to demolish it.
So if both Caucasians and African Americans in Detroit were willing to work together they would have had a nice development just like Indianapolis does with old Bush Stadium which is now an apartment complex. But instead, Detroit’s bad race relations made it so that both sides and all of Detroit lost and lost big time as the Corktown Neighborhood is now in bad shape.
It’s sad when both sides are worried about the color of skin of a gov’t member than the work they did for the city.
And one other thing- when those who are upset about Press’ post worry about a task force report’s conclusions page being completely made up as much they do about a basic and harmless CCO post, that’s when they can be taken seriously. Until then, this is nothing but political double standard whining.
I understand the message that Mr. Parke is trying to infer. He would like to paint me as a racist, which I am not.
Unlike Mr. Parke I will not be silenced on the issues of the part that race plays in the diversity of all human interaction, be it government or otherwise.
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Amendment I
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
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Read it Mr. Parke and sign off on it or resign your chairmanship of the local party.
Editor: Your response to my request for you the Editor to take down the 1st paragraph of the posting by “Pressanykey on July 18, 2013 at 8:28 pm” is very disappointing. Pressanykey’s 1st paragraph states the reason Detroit’s huge financial problems exist today is because the majority of the time, Detroit’s voters elected black men as their Mayor. That is BS. It was the poor polices the Mayor and the City Council followed that caused the financial problems—- not the color of the skin the Mayor has. I believe you are allowing someone to promote racism in your newspaper and that is wrong and serves no useful purpose. You need to reconsider and take it down.
Wayne Parke
Chairman Republican Party
Wayne, the post you have been ranting about did not blame Detroit’s failures on any mayor’s race past or present. It did clearly infer that 50 years of democrat leadership was at the root of Detroit’s problems. Surely you won’t have a problem with that part of the post. Seriously, you are putting words into that post that are just not there. I have read it about 5 times now and there is no basis whatsoever for your interpretation.
So far, Mr. Parke, you are the only one to make that inference. I simply related facts available to anyone that included racial make up.
Sort of like when the media reports that it was an “all white” jury. That sort of thing.
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Here Mr. Parke:
http://frontpagemag.com/2012/dgreenfield/congressional-black-caucus-discovers-entire-english-language-is-a-racist-code-word/
Evidently it is never correct to use the English language to be critical of anyone who is black.
BTW, should they even be using the term Congressional Black Caucus? Should they drop the “Black”?
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Unless the Anointed One in the White House can produce some sort of miracle, Chicago will be the next democrat house of cards to fall.
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I thought Dubya was the only “Anointed” president in our life time from the Supreme Court.
Correct me if I’m wrong but expect a response.
Unlike the moron in the White House, Bush 43 is improving the quality of life in Africa. Meanwhile the President continues to play eight rounds of golf a week.
LOL!
Just how much sleep do you lose worrying about quality of life in Africa Death?
Trash talk.
Agree–trash talk. Serves no purpose.
Chicago? don’t you mean Illinois?
E’ville will be next
It’s a ways off, but we will get there.
“Work is the yeast that makes the dough rise.”
The Pillsbury dough boy became more worried about getting stabbed than getting to work.
Throw in an anti-regulation financial collapse, and realize if Michigan had mega-millions of oil wells and Texas made cars, no one would give a rat if Texas seceded or not.
Detroit Has 100,000+ Creditors, $20. billion in liabilities
(Via the Detroit Free Press):
The city of Detroit filed thousands of documents in its bankruptcy caselate Thursday, as Detroit emergency manager Kevyn Orr builds a case that the city is insolvent and must execute a dramatic restructuring with the court’s support.
Orr restated his case that the city cannot pay its bills and has nearly $20 billion in liabilities.
Among the documents are more than 3,000 pages listing all of the city’s creditors, which number more than 100,000.
The list includes the names of all of the city’s active employees and its retirees, a list of properties that have tax claims with the city, numerous bondholders, business creditors and companies that insured Detroit debt….(more)
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What do you think? Were they giving out incentive packages and tax phase ins right up to the time of filing for bankruptcy? My bet would be yes.
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Detroit Overstaffed Compared To Other Cities
http://www.detroitnews.com/article/20110425/METRO01/104250352
Looking at this chart leaves one scratching their head as to how the city of San Francisco is still solvent.
No wonder there has been such a push by these democrat city machines to combine with county governments, it is a way in which lower the percentage of city employees per city resident.
For Pete’s sake, just look at the figures for San Francisco! That is not GOVERNMENT! That is a JOBS PROGRAM FOR DEMOCRATS!
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How many employees per resident does the City of Evansville have, full time and part time?
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“The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them.”
(Patrick Henry)
Am I the only person on this website who is concerned about the Evansville-Vanderburgh School Corporation’s refusal to live stream their public board of trustees meetings? This is the year 2013 people!
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Mr. Parke – how is identifying every mayor since this problem began racism? i don’t see it.
And to prove it, here’s a list of EVERY mayor in the City of Evansville’s History.
From 1950 until today our city has lost population. I blame EVERY mayor we’ve had from 1950 until now for this problem. They’re ALL WHITE – but so am I – so does that make me a racist?
Here are the idiots we’ve elected Mayor of the City of Evansville. The last two mayors, Winnecke and Weinzapfel, are the WORST in the city’s history. I can’t tell you how many people I know who consider themselves Democrats voted for Winnecke because they were tired of the Weinzapfel regime. Unknowingly they voted for the same character when they voted for Winnecke.
http://evansville200.com/Page2.aspx?ID=33
…And let the record show I voted for Russell Lloyd – and he was a good mayor. But I voted against him the second time because of his attempt to put a stadium downtown.
…And let the record show I vote for Weinzapfel – 1 time – and he was a pathetic mayor. And then he’s the boob who actually BUILT a stadium downtown. Another reason why local Democrats voted for Winnecke. They thought they were voting against Weinzapfel – but they were really just replacing him with his clone.
Isn’t it curious how our national politics follows the same pattern – Democrats vote largely for Democrats, Republicans vote largely for Republicans, while Independents and a few swing voters decide the elections, which swing back and forth from one puppet to another?
Census Quick Facts
Population USA
White alone, percent, 2012 (a)………………… 77.9%
Black or African American alone, percent, 2012 (a) 13.1%
How on earth does such a minority achieve the media saturation we see in this country today?
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