Commentary on criticism of EM posters.

[p69rrh51]

Something that seems to get overlooked. With the EM yes bonds are being protected but union jobs and benefits have a better chance of surviving. This is from wikipedia about pretty much the end of collective bargaining if the city goes into bankruptcy. Also you think the EM is bad he is at least trying to work city council et. al. or so it seems. A bankruptcy judge is not going to be so nice and there is no political choice you get who is assigned to you and he can do whatever he deems is necessary.

Collective bargaining

Municipalities' ability to re-write collective bargaining agreements is much greater than in a corporate Chapter 11 bankruptcy and can trump state labor protections, allowing cities to renegotiate unsustainable pension or other benefits packages negotiated in flush times.

"Congress did not extend the same projection to public employees that it did to those working in the private sector under Chapter 11 bankruptcy rules."

[313WX]

Something that seems to get overlooked. With the EM yes bonds are being protected but union jobs and benefits have a better chance of surviving. This is from wikipedia about pretty much the end of collective bargaining if the city goes into bankruptcy. Also you think the EM is bad he is at least trying to work city council et. al. or so it seems. A bankruptcy judge is not going to be so nice and there is no political choice you get who is assigned to you and he can do whatever he deems is necessary.

Collective bargaining

Municipalities' ability to re-write collective bargaining agreements is much greater than in a corporate Chapter 11 bankruptcy and can trump state labor protections, allowing cities to renegotiate unsustainable pension or other benefits packages negotiated in flush times.

"Congress did not extend the same projection to public employees that it did to those working in the private sector under Chapter 11 bankruptcy rules."

Unions are no better protected under Chapter 9 than they are under an EM.

When Orr was grandfathered to an EM from an EFM on March 28th, he inherited the same powers that an EM had under PA 4 [[other than the catch that city officials can remove him in 18 months). That means, at his sole discretion, he can rip up collective bargaining agreements and impose new ones, sell off any asset he pleases and essentially lock the council members out of city hall.

However, under a Chapter 9 Bankruptcy, a bankruptcy can not interfere with the decisions elected officials make in terms of governing the city. What happens is the city leaders draft a debt restructuring plan and if the judge thinks its reasonable, he or she imposes it on all of the parties [[pensioners, banks, union members, etc.). Also, under a Chapter 9 bankruptcy, Detroit can request that the judge declares a moratorium [[or a stop) on all of its debt payments while the city works out a debt restructuring plan. That money that's no longer going to debt services can goes towards improving the deplorable services the citizens of Detroit are being subjected to. Under an EM, Detroit must continue its debt payments while the EM begs the creditors to accept a restructuring plan. Meanwhile, if the citizens of Detroit object to his decision [[for example, if Orr approved selling off the DWSD to a private company), they have no way of fighting against it as he's not accountable to the voters.

[p69rrh51]

Unions are no better protected under Chapter 9 than they are under an EM.

When Orr was grandfathered to an EM from an EFM on March 28th, he inherited the same powers that an EM had under PA 4 [[other rhan the catch that city officials can remove hin in 18 months). That means, at his sole discretion, he can rip up collective bargaining agreements and impose new ones, sell off any asset he pleases and essentially lock the council members out of city hall.

However, under a Chapter 9 Bankruptcy, a bankruptcy can not interfere with the decisions elected officials make in terms of governing the city. What happens is the city leaders draft a debt restructuring plan and if the judge thinks its reasonable, he or she imposes it on all of the parties [[pensioners, banks, union members, etc.). Also, under a Chapter 9 bankruptcy, Detroit can request that the judge declares a moratorium [[or a stop) on all of its debt payments while the city works out a debt restructuring plan. That money that's no longer going to debt services can goes towards improving the deplorable services the citizens of Detroit are being subjected to. Under an EM, Detroit must continue its debt payments while the EM begs the creditors to accept a restructuring plan. Meanwhile, if the citizens of Detroit object to his decision [[for example, if Orr approved selling off the DWSD to a private company), they have no way of fighting against it as he's not accountable to the voters.

Neither can they fight against a bankruptcy judge doing the same thing, but then the DWSD should have been ripped out of the city's hands decades ago anyway!

[313WX]

Neither can they fight against a bankruptcy judge doing the same thing, but then the DWSD should have been ripped out of the city's hands decades ago anyway!

Yeah, except for the fact that under Chapter 9, a BK judge can't force a municipality to sell off its assets without the consent of the elected officials.

[p69rrh51]

Yeah, except for the fact that under Chapter 9, a BK judge can't force a municipality to sell off its assets without the consent of the elected officials.

Interesting reading looks like the "plan" would be the problem with Chapter 9. Thx 313WX.

Sections 903 and 904 of the Bankruptcy Code are designed to recognize the court's limited power over operations of the debtor.
Section 904 limits the power of the bankruptcy court to "interfere with – [[1) any of the political or governmental powers of the debtor; [[2) any of the property or revenues of the debtor; or [[3) the debtor's use or enjoyment of any income-producing property" unless the debtor consents or the plan so provides. The provision makes it clear that the debtor's day-to-day activities are not subject to court approval and that the debtor may borrow money without court authority. In addition, the court cannot appoint a trustee [[except for limited purposes specified in 11 U.S.C. § 926[[a)) and cannot convert the case to a liquidation proceeding.
The court also cannot interfere with the operations of the debtor or with the debtor's use of its property and revenues. This is due, at least in part, to the fact that in a chapter 9 case, there is no property of the estate and thus no estate to administer. 11 U.S.C. § 902[[1). Moreover, a chapter 9 debtor may employ professionals without court approval, and the only court review of fees is in the context of plan confirmation, when the court determines the reasonableness of the fees.
The restrictions imposed by 11 U.S.C. § 904 are necessary to ensure the constitutionality of chapter 9 and to avoid the possibility that the court might substitute its control over the political or governmental affairs or property of the debtor for that of the state and the elected officials of the municipality.
Similarly, 11 U.S.C. § 903 states that "chapter [9] does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of the municipality, including expenditures for such exercise," with two exceptions – a state law prescribing a method of composition of municipal debt does not bind any non-consenting creditor, nor does any judgment entered under such state law bind a nonconsenting creditor.