- Israel hits symbols of Hamas rule; scores killed
- Mississippi abortion law can’t be enforced
- Teacher who survived Sandy Hook has book deal
- Jury awards Jesse Ventura $1.8M in case vs. ‘American Sniper’ author Chris Kyle
- Middle Eastern firm’s deal to manage U.S. cargo port raises security concerns
- Bob McDonnell’s defense: Lonely wife developed ‘crush’ on CEO
- Chinese hackers stole ‘huge quantities’ of sensitive data on Israel’s Iron Dome
- House Republicans unveil bill to speed deportations of border children
- Californians protest middle school for hiring white man to teach cultural studies
- Killer’s sentencing overturned because mother couldn’t find seat in courtroom
Trial starts; Is Detroit eligible for bankruptcy?
Question of the Day
DETROIT (AP) — The city of Detroit will present a “mountain of evidence” to show that its perilous finances qualify for a turnaround in bankruptcy court, an attorney said Wednesday as a judge opened an extraordinary trial to determine if the largest public filing in U.S. history will go forward.
Detroit, with $18 billion in debt, filed for Chapter 9 protection in July, but it’s not automatic. Judge Steven Rhodes has set aside several days to hear evidence and decide whether the city met many key steps, including good-faith negotiations with creditors, before taking drastic action three months ago.
“There’s nothing left to do here. There is no revenue solution. … Chapter 9 is more needed here than another other possible scenario you could think of,” attorney Bruce Bennett said in his opening remarks.
He said no one can credibly argue that Detroit is solvent.
Witnesses “will present a mountain of evidence showing the insolvency of the city,” Bennett said. “This is one of those cases where the data speaks very clearly and persuasively on its own. It needs no gloss.”
The trial poses a critical decision for Judge Steven Rhodes: If Detroit clears the eligibility hurdle, the case then would quickly turn to how to solve the debt and get city government off the ropes.
“It’s a crucial point in the case,” said lawyer Chuck Tatelbaum, a bankruptcy expert in Fort Lauderdale, Fla. “There will be others, but this is the go or no-go. … If there was ever a poster child for what Congress decided when they enacted Chapter 9, it’s for a city like this.”
Jim Spiotto, a bankruptcy expert in Chicago, said it’s “virtually impossible” to argue that Detroit is solvent.
“They’re not paying their debts,” he said. “Look at their blighted areas. Look at their services.”
Nonetheless, unions and pension funds are challenging Detroit on the eligibility question. They claim emergency manager Kevyn Orr, who acquired nearly unfettered control over city finances following his appointment by Michigan Gov. Rick Snyder, was not genuinely interested in negotiating when they met with his team in June and July. Orr insists pension funds are short $3.5 billion and health coverage also needs to be overhauled.
Evidence will show that Orr “planned to file bankruptcy long before the purported negotiations had run their course, confirming that the ‘negotiations’ were no more than a check-the-box exercise on the way to the courthouse,” Babette Ceccotti, an attorney for the United Auto Workers, said in a court filing.
Earle Erman, attorney for Detroit’s public safety unions, said the city has cut wages and changed health care benefits without across-the-table talks. Lawyer Sharon Levine, who’s representing the American Federation of State, County and Municipal Employees, said the city spent months “mapping out its path to Chapter 9,” not looking for compromises that could keep Detroit out of bankruptcy.
In response, however, attorneys for the city said a June 14 meeting and subsequent sessions with creditors were well-intended but fruitless. A bankruptcy filing was being prepared, they acknowledged, but “never set in stone.”
Spiotto said the judge will have much discretion to determine whether the city has met its “good-faith” burden.
“I don’t think courts require perfection,” he said. “Good faith is not measured solely by, ‘Did they offer what we want?’ It’s about providing opportunity.”
TWT Video Picks
- Boehner rules out impeachment: 'Scam started by Democrats'
- Obama thanks Muslims for 'building the very fabric of our nation'
- Obama's brother wears Hamas scarf bearing anti-Israel slogans in photo
- Tactical advantage: Russian military shows off impressive new gear
- Federal judge grants 90-day stay in D.C. gun case
- McCLAUGHRY: Finish off the "Islamic State" quickly and cheaply
- New York Times reporter Carol Vogel accused of plagiarism
- Iraqi Christians rally at White House: 'Obama, Obama, where are you?'
- Hillary Clinton: Forget Obama, George W. Bush made her 'proud to be an American'
- ISIL destroys key bridge leading to Baghdad; suicide truck bomb severed supply line
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world