City of Detroit Files for Bankruptcy Protection

[Király]

This is making international news. It's the top story at cbcnews.ca right now.

[SDCC]

Local ABC affiliate here in San Diego has a small online article.

http://www.10news.com/news/u-s-world...ruptcy07182013

And nbcnews.com is carrying a story as well.

http://www.nbcnews.com/business/detr...tcy-6C10678946

[dtowncitylover]

This is making international news. It's the top story at cbcnews.ca right now.

Also the top story at BBC News.

http://www.bbc.com/news/

[Ray1936]

Section 24, Constitution of the State of Michigan: "The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractural obligation thereof which shall not be diminished or impaired thereby."

Strikes me that if Detroit can't fund the pension systems, it becomes a state obligation. But I'm sure that will be in the courts, too.

[Wesley Mouch]

Well this is great news for many cities. They now know they can make unlimited promises. And the bill will be paid. No strings attached.

Cities better make their promises fast. Before the adults get home.

[Novine]

Newsflash - that's been part of the Michigan Constitution since at least the 1960s. If lawmakers don't want the state to be on the hook for pension benefits, how about they pass a law that says "municipalities can't skip pension contributions in years when the market does well". Detroit, and other communities, were able to skip pension contributions when the times were good. Now they want to skip payments when times are bad. The system can't work that way.

[daddeeo]

KY jelly stock went up. Bend over everyone.

[ggores]

Wow. They really did it. I've seen a lot of shit happen and go down over the many years, but this one just kinda seems to me to be the end all to... end all. My wonderful City is now much like many of us have been in the past - down and out... broke.... can't pay bills... this might well possibly be the saddest event I've ever seen here. Of course there is optimism as well... a new generation will evolve out of the mess of the past 45 years or so. Detroiters will innovate, adapt, and work twice as hard to protect this fair land. With tongue firmly planted in cheek, I would really like to thank all of the corrupt, greedy, lazy, and above all - the entitlement seekers who have, over all these years really thought that Detroit was just SOOOO special, a "jewel within a jewel" in fact, that never ever would the money run out. Now... all the paper work is in order... the documents have been signed... brief cases and PDA's are locked... lots of "cover your own ass" is set up.... and we'll let the court decide. In Obama's famous campaign stop in Detroit back in, ummmm, 2008 or whenever, he actually sang a couple lines from "Chain of Fools". My belief is that he was not singing it WITH Detroiters, but AT Detroiters. It all boils back down a very simple question - who gonna pay the bills? YOU.http://www.youtube.com/watch?v=gdcvdigOdjI

[DetroiterOnTheWestCoast]

Speramus Meliora; Resurget Cineribus

[Danny]

Detroit is broke, everyone. Blame Coleman Young, Kwame Kilpatrick and Dave Bing!

In America, Fewer black dominant cities will blamed first for their corruption.

[Danny]

The bankruptcy judge from somewheresville will start an estate sale. It's creditors might buy some blighted ghetto and sweep out the bums, yahoos, and property tax cheats.

White folks have finally reclaim Detroit by using politics and Wall Street.

[Cincinnati_Kid]

Newsflash - that's been part of the Michigan Constitution since at least the 1960s. If lawmakers don't want the state to be on the hook for pension benefits, how about they pass a law that says "municipalities can't skip pension benefits in years when the market does well". Detroit, and other communities, were able to skip pension contributions when the times were good. Now they want to skip payments when times are bad. The system can't work that way.

It will all be decided by what side of the bed the bankruptcy judge wakes up on. Orr knew Detroit was headed for bankruptcy anyway. All that postering about trying to work out a deal was nothing but window dressing. He and others actually believes federal laws will ultimately trump the state constitution that protects pensions. It really is no way around it. Sadly, pensioners are going to lose some benefits and cuts to their pension. The debt is astronomical.

[compn]

hey, the people -white and black- of michigan voted down the emergency manager law.
dont blame all us whites for the republicans in lansing screwing over the voters intent.

so the zoo's up for sale? the city parks? belel isle?
white guys gonna put a dumb golf course on belle isle?

[renf]

What is the likelihood that the federal bankruptcy court will accept the petition from Gov. Snyder, Kevyn Orr and the city of Detroit for bankruptcy? The city of Harrisburgh was, arguably, in more percarious financial status than Detroit and sought federal bankruptcy. The bankruptcy judge, as I understand it, turned down their request for federal bankruptcy.
In the Detroit litigation, the pensioners and the bond holders could argue that the city of Detroit has many assets that could easily be liquidated for
cash including some property, the water and sewerage system, the art in the DIA and the historic cars owned by the city's Detroit Historical Museum.
Will it be easy for the Governor and the Emergency Manager to convince
a judge that the city qualified for Chapter 9 bankruptcy? I suspect that the
Emergency Manager knows this terrain very well and would not go forward
unless he were sure of winning in the forthcoming litigation.

[313WX]

What is the likelihood that the federal bankruptcy court will accept the petition from Gov. Snyder, Kevyn Orr and the city of Detroit for bankruptcy? The city of Harrisburgh was, arguably, in more percarious financial status than Detroit and sought federal bankruptcy. The bankruptcy judge, as I understand it, turned down their request for federal bankruptcy.

Per Wikipedia, the reason Harrisburg's bankruptcy petition was denied is because all branches of government didn't authorize the filing of the petition. That of course doesn't apply to Detroit [[only Orr and Snyder had to authorize it under PA 436). And quite frankly, I see no reason why Detroit's petition would be denied.

[313WX]

So apparently, an emergency hearing was scheduled today at 4:00 PM today to grant the pensioners' request to place a temporary restraining order on a bankruptcy filing.

Essentially, Snyder's attorney asked everyone to delay the start of the case for 5 minutes, and everyone agreed. Within that 5 minutes, the bankruptcy petition was filed. The judge, who was also surprised, proceeded to inform the parties in the courtroom that the petition was filed at 4:06 PM.

http://www.freep.com/article/2013071...pension-ingham

[douglasm]

I really liked the New York Times article on the subject. Ignoring the fact that they reprinted about 4 graphs in the middle of the story, it takes a reletively detatched view of the subject.

http://www.nytimes.com/2013/07/19/us...nted=1&_r=0&hp

[mikefmich]

Section 24, Constitution of the State of Michigan: "The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractural obligation thereof which shall not be diminished or impaired thereby."

Strikes me that if Detroit can't fund the pension systems, it becomes a state obligation. But I'm sure that will be in the courts, too.

Thought about you earlier Ray, along with a few other folks.

I did the pins & needles dance in late 2008. If it happened then, I woulda been very SOL.

Retirees would get the worst screwing on this, which just ain't right.

[AUSSIE]

You made the paper in Australia too:

http://www.theage.com.au/business/wo...719-2q8cv.html

Copy and paste of The NY Times, but anyway....

Cheers

[Novine]

"Who said anything about water and sewer debt getting wiped out? I think I'm confused."

Didn't you hear? Detroit owes $20 billion in debt and bankruptcy is required to wipe out that debt. What's that you say? The water and sewer debt doesn't count? But Orr and Snyder have told the citizens of Detroit and Michigan that it does.

[313WX]

"Who said anything about water and sewer debt getting wiped out? I think I'm confused."

Didn't you hear? Detroit owes $20 billion in debt and bankruptcy is required to wipe out that debt. What's that you say? The water and sewer debt doesn't count? But Orr and Snyder have told the citizens of Detroit and Michigan that it does.

From the Detroit News:

...An automatic stay will be issued on most of Detroit’s bills, including unsecured debts, said Ken Schneider, a bankruptcy attorney with Detroit-based Schneider Miller PC. The city will continue to pay secured creditors, including water and sewer bondholders, who have the right to seize city assets if Detroit fails to pay....

http://www.freep.com/article/2013071...-things-expect

[corktownyuppie]

"Who said anything about water and sewer debt getting wiped out? I think I'm confused."

Didn't you hear? Detroit owes $20 billion in debt and bankruptcy is required to wipe out that debt. What's that you say? The water and sewer debt doesn't count? But Orr and Snyder have told the citizens of Detroit and Michigan that it does.

Apparently we have two different understandings of bankruptcy.

[corktownyuppie]

Retirees would get the worst screwing on this, which just ain't right.

I kind of agree on this. But the question is "Who will step up?" I don't think that Detroit has the funds. So who will it be?

[Novine]

"Apparently we have two different understandings of bankruptcy."

Snyder and Orr are trying to have it both ways. They are playing fast and loose with the facts. The water and sewer debt is a perfect example. They are lumping it in with the rest of the city's obligations even though they know that those debts are secured by the payments by the users of the system and there's no way that a bankruptcy judge is going to order those to be reduced. Likewise, they claim that the city has reached its statutory tax limit and can't repay its debts. But they know or should know, that the tax levies for GO bonds aren't bound by the statutory tax limits and that there's no way the city can argue that there's no revenue to repay those GO bonds.

[illwill]

In my opinion, we all knew this was inevitable. After Detroit goes through the bankruptcy process what will life be like after we come out of it?

I personally think things will be the same as they always were and we'll slowly slide back into the same routine and conditions that we're trying to come out of. In order to see a drastic change, crime will have to be reduced noticeably, population will have to increase dramatically, we'll need a "competent" new mayor and council, we'll still have to rebuild/upgrade our infrastructure, we'll need to be open to changing our suicidal traditions, behaviors, mind sets, habits and laws that drove us to this point, and then pray that we can barrow money [[at a decent interest rate) to do these things and much more. Once the dust has settled can we fix a broken Detroit? Bankruptcy is step number 1. Step number 2 is to maintain and not regress. Not spending significantly more than we're taking in.

The cities main priority should be to get hundreds of thousands of tax payers to come into the city. How we do this is the big question?

That's just my honest assessment.