Bankruptcy Deniers Welcome Here

[corktownyuppie]

Every now and then I'll read the Michigan Citizen or listen to callers on talk radio. One of the more curious ideas that keeps getting repeated is that Detroit isn't really bankrupt/insolvent. The reasons that are mentioned usually revolve around the following meme, "Detroit's Not Bankrupt Because...":

- ...we can still afford to pay our elected officials.
- ...we can afford to pay millions in legal and consultant fees.
- ...we still have xxx millions in taxes owed to us.
- ...we haven't sold off _____, _____, or _____.

Now for anyone with an accounting or financial background, these explanations make zero sense. Bankruptcy and insolvency doesn't actually require you to have zero in your account. We see paying $1MM in short-term legal fees as different from paying $1MM every YEAR in some long-term obligation.

But clearly, I'm biased because financials are my primary language.

So for those of you who don't believe the city is actually insolvent, here's my question to you... What exactly would the city need to look like in order for you to see the city as bankrupt?

No, seriously, what would have to happening before we actually appear insolvent?

Would it be paychecks that bounce?
Or should we sell off every jewel to the highest bidder and then spend through all that money first?
We could just lay off all our police force and then use that money to make sure all the bills are getting paid?

There's a segment of the population who believes that this whole thing is a big farce that's meant to screw over the little guy. For the purpose of this conversation, let's accept that as fact.

...so what would it look like to you before you were convinced we were an insolvent city? How far gone would we have to be?

[Danny]

Still in that bankrupcty protests? corktownyuppie. Detroit is dead broke even through they have an extra 550mills in their pocket and over 250mills in regional revues. It's government just don't have enough spending money to keep public some services going. Let the city unions cry boo hoo! and hold up picket signs in front of the Spirit of Detroit Statue. If the court approve's Snyder's puppet Kevyn Orr's request. The money will be tight, too tight to pay anyone but its creditors.

[313WX]

While I'd prefer a bankruptcy without the EM, we're here now so let's get it over with.

[Gistok]

The Michigan Citizen is crap tabloid.... I still remember their old headline...

"ARCHER JR. GETS $70 MILLION GM CONTRACT/GM LAYING OFF 25,000"

They always hated Archer Sr. and Hendrix... and would use sensationalist headlines like this one to promote their propoganda....

[MikeyinBrooklyn]

People who deny Detroit's financial distress remind of a little kid sticking his fingers in his ears so as to avoid listening to an adult. "My ears are shut, my eyes are closed..."

[Scottathew]

While I'd prefer a bankruptcy without the EM, we're here now so let's get it over with.

That probably would have been an option, but no one in the CAY building could get to step one, admitting a problem exists.

[maverick1]

While I'd prefer a bankruptcy without the EM, we're here now so let's get it over with.

This is how I feel. I don't like the EM law and would have prefer bankruptcy without the EM.

Corktownyuppie brings up a good point. I've made similar arguments. It's like they live in a totally different city. I hear "look at all the money downtown, tax them". I think to myself "do you know what a downtown looks like in a thriving city". They don't understand that there isn't that much money downtown. To some of us that grew up here in the 80s and 90s it's obvious that there is no money. The city is empty relative to 13 - 20 years ago. Stable neighborhoods have fallen, grown men scrapping buildings to food on the table, no one paying property taxes, etc. Even if Detroit got the taxes the state owes the city would still be broke. It would be a band-aid on a bullet wound. I think some of it has to do with provincialism. To some folks all city officials are well off and they can't understand that the cost of the high-price lawyers pales in comparison to keeping an 140 sq ft city afloat.

[erikd]

While I'd prefer a bankruptcy without the EM, we're here now so let's get it over with.

Why would you prefer a bankruptcy without the EM?

We have been facing emergency management and bankruptcy for a long time, and we have had many discussions and debates about how this situation could play out.

What makes you say that our bankruptcy would be better without the EM?

[MikeyinBrooklyn]

What makes you say that our bankruptcy would be better without the EM?

I can't speak for 313WX, but I think there is a victimized ideology among many people on this board and in this city. Part of that ideology is to complain about how awful things are and should have been done differently. If we had been sent into bankruptcy without an EM, there would be many people complaining that we didn't have a chance to have an EM to try to fix things without bankruptcy. As for me, I think Orr has done more to improve the city's standing in a short period of time than any mayor in my lifetime. I am glad Orr is there; I am reluctantly glad we're in bankruptcy proceedings. The return of real but minimal city services will be a welcome thing.

[313WX]

Why would you prefer a bankruptcy without the EM?We have been facing emergency management and bankruptcy for a long time, and we have had many discussions and debates about how this situation could play out. What makes you say that our bankruptcy would be better without the EM?

Well first off, how can we sure the city will be better off WITH the EM in bankruptcy? We're still early on in the process remind you. At ebst, it'll probably be no worse off. That said, the fact that I will have absolutely no say in Detroit's future as a resident is what I dislike. Never mind the fact that I, as a voter, repealed through a referendum the appointment of EMs in November 2012 and despite tat, we have one now anyway. But none of that is neither here or there, as the EM is here and Detroit has filed for bankruptcy. I'm done with Michigan, but the people who will still be here in Detroit [[the asshole-ish way things played out and all) , such as my friends and family, do deserve better. So I cautiously hope for the best as all of this plays out. mind the fact that I, as a voter, repealed through a referendum the appointment of EMs in November 2012 and despite tat, we have one now anyway.

[stasu1213]

I wish that Orr would hire more building and safety inspectors so small businesses could open in a timely manner instead of waiting forever for the one or two inspectors to come around to give the green light to open.

[BankruptcyGuy]

I can assure you that the City would be much, much worse off without a single point of contact in the bankruptcy process. When bankruptcy judges hold hearings, conduct mediation, and have negotiations, they often require a person with authority to negotiate to be sent. With the City governance as it is, that would be virtually impossible. Any agreement would have to be agreed to by one side, sent to Council for review, sent to the mayor for signature, all the while out in the open for other creditors to see [[and intervene against) before signature.

The judge would likely tire of such a scenario if deals were cut and subsequently retraded. When a judge senses that nothing can get done with the debtor in place, they either a) solicit the appointment of a trustee, or b) start ruling in favor of creditors.

The EM structure is well-suited for bankruptcy. Whether the EM is sufficiently responsive to the demands of the residents is a different matter.