Wednesday, April 23, 2014

Detroit officially enters bankruptcy

Compiled by Eric Schulzke, Deseret News National Edition

Published: Tue, Dec. 3 1:05 p.m. MST

 In an Oct. 10, 2013 photo, a manhole cover is seen in Detroit. The next step for emergency manager Kevyn Orr if the bankruptcy gets approved is to put together a reorganization plan, which he has said he plans to do quickly, possibly by the end of the year. He’s already indicated what that plan would look like but those plans may be disrupted depending on what Judge Steven Rhodes has to stay in his bankruptcy decision on Tuesday, Dec. 3.

In an Oct. 10, 2013 photo, a manhole cover is seen in Detroit. The next step for emergency manager Kevyn Orr if the bankruptcy gets approved is to put together a reorganization plan, which he has said he plans to do quickly, possibly by the end of the year. He’s already indicated what that plan would look like but those plans may be disrupted depending on what Judge Steven Rhodes has to stay in his bankruptcy decision on Tuesday, Dec. 3.

(Carlos Osorio, Associated Press)

Detroit is finally officially bankrupt, a federal bankruptcy judge certified on Tuesday.

"It is indeed a momentous day," U.S. bankruptcy judge Steven Rhodes said at the end of a 90-minute summary of his ruling, USA Today reported. "We have here a judicial finding that this once-proud city cannot pay its debts. At the same time, it has an opportunity for a fresh start. I hope that everybody associated with the city will recognize that opportunity."

Rhodes surprised some observers by saying he would support the city in shaving pension expenses, a key bone of contention. The ruling on pensions has significant implications for others cities elsewhere. In California, for example, cities such as San Bernardino could seize the precedent, the Sacramento Bee suggested.

"But one crucial component was establishing that city officials negotiated in good faith with its creditors before filing for bankruptcy," The Huffington Post reported. "Rhodes said that the city did not negotiate in good faith on June 14, when it met with union leaders and other stakeholders, one month before filing for bankruptcy. The filing, and particularly Detroit's attempt to negotiate with creditors, has been hotly contested by unions and other debtors in court since the trial began in October."

The ruling by Rhodes could help bankrupt San Bernardino in a potential legal showdown with CalPERS over the sanctity of employee pensions.

"CalPERS, which argues that pensions can’t be cut, has tried unsuccessfully to get San Bernardino’s bankruptcy filing thrown out of court, saying the city is just trying to get out from under its lawful pension obligations," the Bee reported. "The city temporarily halted pension contributions to CalPERS right after going bankrupt, and while it has renewed the payments, it still owes the big pension fund about $15 million in past-due payments."

"It's a sad day for the people of Detroit," American Federation of State, County and Municipal Employees attorney Sharon Levine told CNBC in an interview. Levine said the AFSCME had filed an immediate appeal.

Email: eschulzke@desnews.com

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1. TRUTH
Salt Lake City, UT,
Dec. 3, 2013

Unions and Democrats bankrupted Detroit....its only fitting that those who soaked the city pay the price for the insolvency... good job judge!

2. David
Centerville, UT,
Dec. 3, 2013

Once again the Democrats and liberals have misled American citizens. They promised that union members would receive exorbitant pensions and benefits...that the cities could not afford.

And now that everyone recognizes that cities are going bankrupt, what do the unions do? They don't renegotiate for the good of the community. Instead, they behave with greed and careless abandon towards the citizens who pay for their pensions! The unions take the cities to court.

Now apply actual events of bankruptcy, due to Democrats and unions, to Obamacare and other programs that are bankrupting our country.

Now ask yourself...why do we keep electing these people who are causing so much destruction?

3. GrinOlsson
Ketchikan, AK,
Dec. 3, 2013

As an American, we question our cities, state and federal government need for our tax dollars. Many times we angrily ask why do they go so far into debt? Then, I note we give Islamic nations like Pakistan over 6 billion dollars to "like us better". I would prefer them to continue to dislike us, and use the money to pay off our city debts. This is my opinion, and that is the way it is!

4. PDXClimber
Portland, OR,
Dec. 3, 2013

Global competition and a lack of inventiveness did in the US car market, NOT the Unions.
Don't you remember that in 2007-8 GM/Ford/Crysler had almost NO fuel efficient vehicles ready? Not smart and lack of vision.
Change happens. How we respond to the change is what makes the difference. Yes there is Global competition. But we can still pay a living wage.
The fact that there are less and less living wage jobs is why the government is being asked to pony up. Where else does an American get the means? You work 40+ hours a week and still have to choose from paying the rent or feeding the family. This is a nightmare shared my almost 1/2 the US.
The situation out there is horrendous and The Market is NOT helping. You are a fool if you believe it ever will.
Wages have to go up. Unions are the way that will happen. As people remove the blinders and quite listening to the talking points (because you can't pay your bills with right wing outrage) Unions will be returning to offer those people a place at the bargining table

5. Howard Beal
Provo, UT,
Dec. 3, 2013

Lots of cities have unions and pensions but don't go bankrupt. I think the problem is more complex than most tea-partiers think.