Comments Subscribe to Personal Liberty News Feed Subscribe to Personal Liberty
 

Detroit Warned About Bankruptcy Option

DETROIT, Dec. 27 (UPI) — Bankruptcy experts said Detroit should choose a path other than seeking court protection, which would be costly in terms of time and money.

The city would lawyer up. The unions would lawyer up. Creditors would also seek legal advise, “you you’re taking tens of millions of dollars in legal fees,” said Ray Graves, a retired U.S. bankruptcy judge, The Detroit News reported Tuesday.

“I’ll guarantee you this: It’s not going to be a quick in-and-out of bankruptcy that we saw with GM and Chrysler. That’s not going to happen,” he said.

In Michigan, an financial emergency plan for counties and municipalities that passed into law in March allows the governor to appoint an emergency manager to take over a local government’s finances if solutions prove elusive.

If an emergency manager is appointed, he or she would have the authority to tear up contracts with unions and would be the only one who can file for bankruptcy on a city’s behalf.

The object, however, is to avoid bankruptcy if at all possible.

“This emergency manager law is really set up to accomplish what you can do in bankruptcy without having to file for bankruptcy,” said Brad Coulter, a municipal turnaround expert at O’Keefe & Associates Consulting.

“That’s how you would do it the proper way, versus fighting until the end until you have no choice but to do an EM or file (Chapter 9),” he said.

For now, the governor’s office, the state Treasury Department and Detroit Mayor Dave Bing’s office are refusing to speculate on whether or not Detroit, with $12 billion long-term liabilities, would actually be forced to file for court protection.

Currently, the mayor is seeking concessions with each of the city’s 48 unions, the News said.

“As Mayor Bing has repeatedly said, the remedy for the city’s financial crisis is his plan that seeks $102 million in savings for this fiscal year, including structural reforms in health care and pensions, layoffs and other cuts,” said Bing’s Chief of Staff Kirk Lewis.

“Speculating on worst-case scenarios … is not productive nor is it something we’re focused on,” he said.

UPI - United Press International, Inc.

Since 1907, United Press International (UPI) has been a leading provider of critical information to media outlets, businesses, governments and researchers worldwide.

Facebook Conversations

Join the Discussion:
View Comments to “Detroit Warned About Bankruptcy Option”

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.

Is there news related to personal liberty happening in your area? Contact us at newstips@personalliberty.com

Bottom
close[X]

Sign Up For Personal Liberty Digest™!

PL Badge

Welcome to PersonalLiberty.com,
America's #1 Source for Libertarian News!

To join our group of freedom-loving individuals and to get alerts as well as late-breaking conservative news from Personal Liberty Digest™...

Privacy PolicyYou can opt out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.