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The Great Detroit Flood of 2014 resulted from the second largest downpour in Detroit history. It closed several expressways and poured into thousands of Metro Detroit basements. The 4.72 inches of rain was the highest daily recorded rainfall since July 31, 1925, when 4.74 inches of rain fell. What went wrong? Could it have been prevented?

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  1. #1
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    Default City of Detroit Files for Bankruptcy Protection

    Wow. I guess we were in a "not if, but when" holding pattern, but I didn't expect it so soon.

    http://www.freep.com/article/20130718/NEWS01/307180107/Detroit-prepares-file-bankruptcy-soon-Friday

  2. #2
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    Yeah, they have to do the whole process before the law is found unconstitutional.

  3. #3
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    I wonder what the pension folks will get in the end. You have to assume that the city's contribution to health care will be either wiped out or reduced to a small subsidy. If they get 30-50 cents on the dollar for the pension part, that's only something like 15-30 cents on the dollar for the combined pension plus health care.

    Facing that reality, Orr's "opening offer" of about 10 cents on the dollar doesn't seem that bad, provided he would have been willing to negotiate up substantially, to something like 40 cents.

    It's really just stunning to actually see "in print", regardless of where you fall on the issue, though.

  4. #4
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    Quote Originally Posted by Detroitnerd View Post
    Yeah, they have to do the whole process before the law is found unconstitutional.
    That's one of the reasons (the federal lawsuits to repeal PA 436 will both be heard next month, and of course since Snyder thinks PA 436 is the best way to expedite the bankruptcy process, we can't risk a federal judge ruling it unconstitutional prior to the bankruptcy filing). but I think the Pensioners' lawsuit to block the pension cuts is what ultimately rushed the pull of the trigger

  5. #5
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    My question is WHEN will the residents get our "upgraded" city services? Will it kick in after the bankruptcy is done and over with or can we expect some changes sooner as outlined in the plan Orr presented?

  6. #6
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    A bankruptcy judge is going to wipe out the city's current obligations to the pensions and future payments going forward? No way that's going to happen. Water and sewer debt wiped out when there's revenue coming in? Not going to happen. All this looks very clean up front. It's going to get very messy and I won't be surprised if Mr. Orr leaves a giant mess behind just as Robert Bobb did at DPS.

  7. #7
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    Quote Originally Posted by Novine View Post
    A bankruptcy judge is going to wipe out the city's current obligations to the pensions and future payments going forward?.
    Who said this? Cents on the dollar, yes, but not "wiped out"

  8. #8
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    Quote Originally Posted by Novine View Post
    A bankruptcy judge is going to wipe out the city's current obligations to the pensions and future payments going forward? No way that's going to happen. Water and sewer debt wiped out when there's revenue coming in? Not going to happen. All this looks very clean up front. It's going to get very messy and I won't be surprised if Mr. Orr leaves a giant mess behind just as Robert Bobb did at DPS.
    Who said anything about water and sewer debt getting wiped out? I think I'm confused.

  9. #9
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    Quote Originally Posted by Novine View Post
    A bankruptcy judge is going to wipe out the city's current obligations to the pensions and future payments going forward? No way that's going to happen. Water and sewer debt wiped out when there's revenue coming in? Not going to happen. All this looks very clean up front. It's going to get very messy and I won't be surprised if Mr. Orr leaves a giant mess behind just as Robert Bobb did at DPS.
    1. Robert Bobb didn't attempt to fix DPS' finances in the same way that Orr has attempted to fix Detroit's finances. Instead of going to DPS' creditors with a restructuring plan, Bobb imposed cuts, cuts and more cuts on the students and teachers. All Roberts has done differently from Bobb to attempt to fix DPS' finances was privatize the operating costs of those 15 DPS schools.

    2. The purpose of Chapter 9 bankruptcy is not to wipe out debt, but restructure it. Since the creditors won't accept haircuts voluntarily, the haircuts will be imposed on them by a bankruptcy judge.
    Last edited by 313WX; July-18-13 at 02:25 PM.

  10. #10
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    Default

    Next thing, HALIBUT will be filing

    just for posterity, this thread's original title was COD will file for bankruptcy

    now at least the lame joke has context
    Last edited by rb336; July-18-13 at 08:56 PM.

  11. #11
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    kevin orr is a bankruptcy guy
    kevin orr's firm is a bankruptcy firm

    we knew this on day one. i'm surprised they didnt say the b-word until now.

  12. #12
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    Quote Originally Posted by compn View Post
    kevin orr is a bankruptcy guy
    kevin orr's firm is a bankruptcy firm

    we knew this on day one. i'm surprised they didnt say the b-word until now.
    I'm confused on this, too. Orr threatened bankruptcy in his first public address and first media interviews. He mentioned it several times through the process, even stating that the week of July 15 was going to be the week when the decision was finally made.

    The idea was to see if they could settle up (or partially settle up) as much of a deal as possible to minimize the time and expense in bankruptcy court which would be inevitable if too many creditors rejected the deal.

    What I think is fascinating is the number of creditors who haven't outright rejected the offer. They are doing and saying a lot of things: filing lawsuits, writing articles stating that the offers are "unfair", hosting press conferences. But the one thing all the creditors are afraid to do is say, "no deal".

    It does have me wonder what is actually going on behind the scenes there.

  13. #13
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    Quote Originally Posted by corktownyuppie View Post
    I'm confused on this, too. Orr threatened bankruptcy in his first public address and first media interviews. He mentioned it several times through the process, even stating that the week of July 15 was going to be the week when the decision was finally made.

    The idea was to see if they could settle up (or partially settle up) as much of a deal as possible to minimize the time and expense in bankruptcy court which would be inevitable if too many creditors rejected the deal.

    What I think is fascinating is the number of creditors who haven't outright rejected the offer. They are doing and saying a lot of things: filing lawsuits, writing articles stating that the offers are "unfair", hosting press conferences. But the one thing all the creditors are afraid to do is say, "no deal".

    It does have me wonder what is actually going on behind the scenes there.
    Leaking this info to the press may force their hands.

  14. #14
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    Quote Originally Posted by compn View Post
    kevin orr is a bankruptcy guy
    kevin orr's firm is a bankruptcy firm

    we knew this on day one. i'm surprised they didnt say the b-word until now.
    Correct, bankruptcy was the plan all along, along with breaking the unions and privitizing as much as possible. BTW, noticed that Bank of
    America has already accepted 75 cents on the dollar, not much of a haircut - What a surprise!

  15. #15
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    Time to update the title of this thread...

    Detroit files for Chapter 9 bankruptcy amid staggering debts

    http://www.freep.com/article/20130718/NEWS01/307180107/

  16. #16

    Default Bankrupt!

    Seems like tomorrow is here today. http://www.freep.com/article/2013071...rgency-manager

  17. #17
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    Quote Originally Posted by DetroiterOnTheWestCoast View Post

    Some of the early stories erroneously report that the Governor has yet to sign off on the filing. The actual filing, 16 pages, includes the Governor's letter specifically authorizing it. And thus we begin.

  18. #18
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    Maybe the erroneous reporting is because he just "said" it instead of declaring it?


  19. #19
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    This was always the likeliest path. Now it is up to Orr to sell a plan to the judge, whoever that turns out to be.

  20. #20
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    Quote Originally Posted by ct_alum View Post
    BTW, noticed that Bank of
    America has already accepted 75 cents on the dollar, not much of a haircut - What a surprise!
    That wasn't unsecured debt, so actually it was a pretty large haircut. It was somewhat surprising they accepted the 75 cents.

  21. #21
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    Default

    Nothing to see here... go back to work....

  22. #22
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    Quote Originally Posted by mwilbert View Post
    That wasn't unsecured debt, so actually it was a pretty large haircut. It was somewhat surprising they accepted the 75 cents.
    With the high rate they have been charging the City, I wouldn't doubt that they have actually already recovered the principle.

  23. #23
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    The governor flat out lied and said Kevyn Orr hadn't recommended bankruptcy to him. But his letter says Orr recommended it on July 16th.

    Anyway, the battle now moves in part to whether a plan that proposes to cut pensions will be considered a legal plan. The bankruptcy code says the plan cannot violate law. It does not say what law. Federal pension rules (ERISA) do not apply to public pensions, so it is not clear that there is any applicable federal law to trump the state law. At least none I have uncovered yet.

  24. #24
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    Quote Originally Posted by Locke09 View Post
    With the high rate they have been charging the City, I wouldn't doubt that they have actually already recovered the principle.
    You could well be right. That whole deal started as tribute to the incompetence of the city's financial people, and ended as a cautionary tale of what happens when you have to make a deal and have no cards.

  25. #25
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    I don't know a damn thing about bankruptcy law. I'm not well-versed on the subject of government finance. I pay about as much attention to politics as I do pine-car derby racing. But I know one thing: Little people like you and me are going to get screwed in this bankruptcy deal. Why? Because we always do. Always. When's the last time some huge paradigm shift initiated by a government entity actually benefitted us? Good luck waiting for city services to improve. Call me when it happens. Maybe the DDOT bus will have gotten here by then.

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