It sounds like Orr is getting Detroit ready for bankruptcy court

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May-08-13, 04:06 PM
iheartthed

It sounds like Orr is getting Detroit ready for bankruptcy court

Quote:

“We’ve been collecting operating deficits at about $18 million to $20 million a year. That’s nobody’s fault, I think, frankly, the mayor and the council has done the best they can with what they have. The city has probably cut as much as it can cut to the bone now, and so its been trying to operate on the basis of borrowing short-term loans all the time,” he said.

Orr said he isn’t ruling out bankruptcy for the city just yet.

“Frankly, from my perspective, if I can accomplish what I need to accomplish without bankruptcy, I’d be elated,” he said. “I can’t guarantee that [bankruptcy won't happen] in the least, in fact, to a large degree that’s going to be dependent upon the positions of a lot of other stakeholders that they have in this, some of whom might prefer a court order to make them do the things they need to do.”

http://detroit.cbslocal.com/2013/05/...han-i-thought/

Apparently, there's nothing left to cut.
May-08-13, 04:55 PM
rb336

sounds like an honest assessment, and proof that an EM was a pointless exercise
May-08-13, 05:08 PM
313WX

Quote:

Originally Posted by rb336

sounds like an honest assessment, and proof that an EM was a pointless exercise

Well duh!!!
May-08-13, 06:13 PM
MidTownMs

Quote:

Originally Posted by rb336

sounds like an honest assessment, and proof that an EM was a pointless exercise

Who Knew...:confused:
May-08-13, 06:17 PM
illwill

I assume anyone who knows and understands the City of Detroit knew this was the ONLY way to go all along...
May-08-13, 08:02 PM
mwilbert

I disagree with the preceding comments on two points.

1) Whether or not Orr believes the city needs to go into bankruptcy, his best leverage in negotiations with the people he can't just cram down unilaterally comes from a credible threat to do so. Of course he isn't going to rule out bankruptcy, or make it sound like a remote contingency.

2) If we do go into bankruptcy, going through the EM process is going to make Detroit's case much more credible. If you were a bankruptcy judge, would you be more likely to believe the mayor and city council that they had done everything possible to cut costs and raise revenue, or would you be more likely to believe Orr. I know which I would find more credible.

I believe Detroit probably will need to go into bankruptcy, but I don't think that makes the EM process pointless.
May-08-13, 09:19 PM
compn

they hired orr's bankruptcy firm.
of course the city is going into bankruptcy and selling off to the highest/cook'dist bidder.

selling off the water system to a private firm? here we go!
May-08-13, 09:49 PM
rb336

Quote:

Originally Posted by compn

they hired orr's bankruptcy firm.
of course the city is going into bankruptcy and selling off to the highest/cook'dist bidder.

selling off the water system to a private firm? here we go!

I believe that selling off the water system isn't legal, as it is technically a separate entity
May-08-13, 11:13 PM
corktownyuppie

Quote:

Originally Posted by mwilbert

I disagree with the preceding comments on two points.

1) Whether or not Orr believes the city needs to go into bankruptcy, his best leverage in negotiations with the people he can't just cram down unilaterally comes from a credible threat to do so. Of course he isn't going to rule out bankruptcy, or make it sound like a remote contingency.

2) If we do go into bankruptcy, going through the EM process is going to make Detroit's case much more credible. If you were a bankruptcy judge, would you be more likely to believe the mayor and city council that they had done everything possible to cut costs and raise revenue, or would you be more likely to believe Orr. I know which I would find more credible.

I believe Detroit probably will need to go into bankruptcy, but I don't think that makes the EM process pointless.

It's like you're reading my mind.

I'm still of the belief that the outcome of a bankruptcy hearing would be similar to the negotiated outcome of an EM who uses the threat of bankruptcy to accelerate the process and shave years of due process and hundreds of millions in unnecessary fees and lost revenue.

And yes, God forbid this thing does go to bankruptcy court, it really means a whole lot more when Kevyn Orr, a capitalist democrat from out of state, says it... in comparison to when 2 ardent black nationalists say it while complaining that the suburbs are taking over Cobo Hall and Belle Isle.
May-09-13, 12:05 AM
corktownyuppie

btw...can this finally end the conspiracy theory that Orr was sent by shadowy banksters to f--k pensioners make sure bondholders get paid?
May-09-13, 12:00 PM
Wesley Mouch

Quote:

Originally Posted by corktownyuppie

btw...can this finally end the conspiracy theory that Orr was sent by shadowy banksters to f--k pensioners make sure bondholders get paid?

Nah -- it will just prove to conspiracy theorists that it was a brilliant conspiracy. Me? I don't think the shadowy banksters are that smart. Selfish and greedy, yes. Smart, no.

There was a lot to learn from that brief article. The words that got my attention were:

Quote:

“Frankly, from my perspective, if I can accomplish what I need to accomplish without bankruptcy, I’d be elated,” he said. “I can’t guarantee that [bankruptcy won't happen] in the least, in fact, to a large degree that’s going to be dependent upon the positions of a lot of other stakeholders that they have in this, some of whom might prefer a court order to make them do the things they need to do.” [[emphasis added)

The structural problem he's addressing is that Union leadership has a really hard time doing the right thing -- because their members don't believe that the problem really exists. Orr is smart to realize that many of the people with whom he will be negotiating may want to restructure, but they can't possibly say that to their members without getting whacked. As such, Union leadership is very likely to be anti-EFM. That's something I hadn't realized. Well, what I hadn't realized is that they're anti-EFM because its a 'voluntary' restructuring. They'll lose their jobs if they agree. Better to have it force fed by a judge -- and then tell the members how hard they fought against it 'tooth and nail'.

Ain't politics grand. Its never what it seems.
May-09-13, 12:05 PM
corktownyuppie

Quote:

Originally Posted by Wesley Mouch

As such, Union leadership is very likely to be anti-EFM. That's something I hadn't realized. Well, what I hadn't realized is that they're anti-EFM because its a 'voluntary' restructuring. They'll lose their jobs if they agree. Better to have it force fed by a judge -- and then tell the members how hard they fought against it 'tooth and nail'.

Ain't politics grand. Its never what it seems.

That's an interesting -- and likely accurate -- perspective. Just as I have a lot more faith in Kevyn Orr's conclusion than Joann Watson's...it's very feasible that the union members put a lot more weight in a bankruptcy court's opinion than a Governor Synder appointee.

We're both committing the same sin, but from opposing perspectives.

You can't take the politics out of politics.
May-09-13, 12:23 PM
mwilbert

Quote:

Originally Posted by Wesley Mouch

Well, what I hadn't realized is that they're anti-EFM because its a 'voluntary' restructuring. They'll lose their jobs if they agree. Better to have it force fed by a judge -- and then tell the members how hard they fought against it 'tooth and nail'.

I can't say what the union membership may believe, but restructuring the current union members' wages and benefits wouldn't be voluntary. The big things that Orr can't handle unilaterally are debt and vested pensions. The most likely deal Orr would be trying to be make with the unions would be pension concessions for reduced cuts to the current workforce, and it is hard to believe that the current membership couldn't be sold that.
May-09-13, 12:47 PM
Honky Tonk

The ship is sinking and the passengers are upset they've stopped serving drinks.
May-09-13, 12:56 PM
Wesley Mouch

Quote:

Originally Posted by corktownyuppie

That's an interesting -- and likely accurate -- perspective. Just as I have a lot more faith in Kevyn Orr's conclusion than Joann Watson's...it's very feasible that the union members put a lot more weight in a bankruptcy court's opinion than a Governor Synder appointee.

We're both committing the same sin, but from opposing perspectives.

You can't take the politics out of politics.

Good point.

So Engler, I mean Snyder could just as well put in a white Republican in as the EFM -- because it doesn't matter. The messenger is shot regardless....?

[[Something here makes me think of Cleavon Little in Blazing Saddles threatening to shoot himself.)
May-09-13, 01:05 PM
Gistok

Here's what Orr can and cannot do.... [[per Pensions & Investments Website)...

Mr. Orr is expected to start pension fund negotiations immediately, said Patrick O'Keefe, founder and CEO of turnaround specialists O'Keefe and Associates Consulting LLC, Bloomfield Hills, Mich. “Everything is on the table, everything's possible,” Mr. O'Keefe said.

Not on the menu are the accrued benefits of city employees covered by the two pension plans, said Bettie Buss, senior research associate at the Citizens Research Council of Michigan, Livonia, which focuses on local and state government.

“The Michigan Constitution has special protections for participants in local and state defined benefit plans,” Ms. Buss said. “Providing benefits is a contractual obligation. The emergency manager of any Michigan municipality can't reduce the earned benefits of existing participants.”
May-09-13, 01:30 PM
Eber Brock Ward

Quote:

Originally Posted by Gistok

Here's what Orr can and cannot do.... [[per Pensions & Investments Website)...

Mr. Orr is expected to start pension fund negotiations immediately, said Patrick O'Keefe, founder and CEO of turnaround specialists O'Keefe and Associates Consulting LLC, Bloomfield Hills, Mich. “Everything is on the table, everything's possible,” Mr. O'Keefe said.

Not on the menu are the accrued benefits of city employees covered by the two pension plans, said Bettie Buss, senior research associate at the Citizens Research Council of Michigan, Livonia, which focuses on local and state government.

“The Michigan Constitution has special protections for participants in local and state defined benefit plans,” Ms. Buss said. “Providing benefits is a contractual obligation. The emergency manager of any Michigan municipality can't reduce the earned benefits of existing participants.”

Sure, he can't unilaterally adjust pension benefits. But, remember that health care benefits are not protected.

I would be willing to bet that the pensioners would voluntarily come to the table were Orr to say "I will be cutting all of your retirement benefits unless you agree to a pension cut."
May-09-13, 10:54 PM
Novine

I wouldn't count on that. Whether health care benefits would stay or go would be something to be litigated. Orr doesn't have time to be tied up in court.
May-10-13, 01:37 AM
313WX

Quote:

Originally Posted by Novine

I wouldn't count on that. Whether health care benefits would stay or go would be something to be litigated. Orr doesn't have time to be tied up in court.

Agreed.

Whereas, in a bankruptcy, the judge can almost immediately grant an order to either cut health care benefits entirely or to reduce them to pennies on the dollar, like in Vallejo, California.

It could also be possible that the reason nothing has happened as of yet in terms of reforms is because Orr and Snyder are simply buying time for the federal lawsuit to blow over [[to not give the plaintiffs more ammo).
May-10-13, 11:22 AM
Cincinnati_Kid

Quote:

Originally Posted by 313WX

Agreed.

Whereas, in a bankruptcy, the judge can almost immediately grant an order to either cut health care benefits entirely or to reduce them to pennies on the dollar, like in Vallejo, California.

It could also be possible that the reason nothing has happened as of yet in terms of reforms is because Orr and Snyder are simply buying time for the federal lawsuit to blow over [[to not give the plaintiffs more ammo).

Those pensioners receiving $100,000 or more per year, are more than able to ante up if they're benefits get cut. It's the pensioners that receive far less that will take the hit.
May-10-13, 11:26 AM
Wesley Mouch

Quote:

Originally Posted by Eber Brock Ward

Sure, he can't unilaterally adjust pension benefits. But, remember that health care benefits are not protected.

I would be willing to bet that the pensioners would voluntarily come to the table were Orr to say "I will be cutting all of your retirement benefits unless you agree to a pension cut."

EBW: Who represents the pensioners in negotiating a voluntary cut to their pensions. Are they simply individuals? Would there have to be 10,000 individual agreements, or is there a group that has the authority to negotiate on their behalf. Clearly the Union could speak for the unionized members. After all, they represented them in getting their benefits. But what of the regular workers? Who speaks for them?