Posted on 06/17/2013 2:38:22 PM PDT by JerseyanExile
In Detroit, bankruptcy lawyer turned city manager Kevyn Orr is playing hardball while preparing the city for a likely Chapter 9 bankruptcy. He’d like the various stakeholders to negotiate a “pre-packaged” bankruptcy in order to avoid a drawn-out and extremely costly legal battle, but reaching agreement could be incredibly tough, as Reuters points out:
[G]etting everyone on board for a pre-packaged plan is easier said than done, said Douglas Bernstein, a bankruptcy attorney at Plunkett Cooney in the Detroit area.
“When it comes to a pre-packaged plan, the big question is whether he (Orr) would have enough acceptance going into court,” he said. “He would need sufficient votes from all the creditor classes and that will not be easy.”
One problem is that Detroit’s creditors or stakeholders have different priorities. The main areas of uncertainty surround its unions and pension funds, which may not have much bargaining room and may feel their best chance lies in bankruptcy proceedings rather than a negotiated pre-packaged deal.
By holding out, the city’s unions and pension funds would be setting up a legal battle that could lead all the way to the Supreme Court. At issue is a conflict between federal and state law: Michigan’s state constitution specifically protects pensions and retirement benefits, but that clause is in tension with federal bankruptcy law. The unions would likely argue that the 10th Amendment “trumps the notion that federal law is supreme.”
If the Supreme Court rejected that argument, it would deal a major blow to public sector unions across the country. According to bankruptcy lawyer Michael Sweet, “The last thing (union pension funds) may want is for a judge to rule on that….Because if the judge ruled against them, it would open the floodgates.” Every public sector union in the country would then be on notice that underfunded pension programs will ultimately be welshed on by cities and states.
If the unions prevailed, though, federal bankruptcy law could be called into question elsewhere. Either way, it’s a major blow to blue model government: either states’ rights get a big boost or public sector unions take it on the chin.
Screw the union $h!tbags. Their greed and corruption was a large part of this as well as their intimate ties to the National Socialist Democrat Party. You all killed the golden goose and now you get to eat crow.
“Every public sector union in the country would then be on notice that underfunded pension programs will ultimately be welshed on by cities and states.”
Let the welshing BEGIN!!
Gee, they didn't behave like that for Scott Walker 2 years ago now did they?
The union pensions and contracts are just torts, like any other.
The folks in charge of Detroit gave the folks NOT in charge exactly what they asked for, a free lunch. Since there IS no such thing, it’s time to pay the piper. Ooops, no money. My heart bleeds for them....NOT.
Assets could range over $50 Billion if you count the DIA's collection, Belle Isle, and the water department. Looks like the real estate and the paintings should cover things.
http://www.freerepublic.com/focus/news/3031962/posts?page=15#15
Compared to what will happen in other large cities, this looks pretty good from a conservative point of view.
I guarantee we’ll end up paying out hundreds of billions in bailouts when cities like Chicago are forced to quit digging.
They are gonna loose their Retiree-Health-Care, and get shuffled to Obamacare and Medicare, no ifs ands or buts per Mr. Orr.....
How is that hopey changey workin' for ya..
The unions making a 10th Amendment argument. Talk about irony...
Total debt is about 19 billion with the majority being the Pension Liabilities. Orr does not want to sell the "Assets" you mentioned to leave something for civic pride and some cornerstones to rebuild the city on.
Belle Isle will probably get some sort of a State deal being floated, with the H20 Dept going regional with new management already cleaning up that cesspool.
The DIA, that it up in the air, again Orr doesn't want the city pillaged like something out of warn torn Europe, I give him kudos for the Optomistic attitude.
That would be interesting to witness: a democrat front arguing for strengthened states' rights. Wow!
I forgot that since the Chrysler and GM bond debacles contract law in the US is more like a spoils system. I would not be a happy bondholder getting 10 cents on the dollar while the DIA is sitting on paintings that could be liquidated so I can get paid.
This will be an interesting bankruptcy.
Orr is looking to the future and the need for things like art as business is returning to the city. I do think the state should take over stewardship of things like Belle Isle till the corrupt are driven from power. (Belle Isle is a big money maker)
There is big time private money moving into Detroit and pledging to move into Detroit once things settle. The new bridge alone will bring in a lot of warehousing and freight related jobs.
If I was a creditor I would demand that the art be sold to pay the debts of Detroit. On what basis do you assert that there is big time money moving into Detroit once things settle out? When things settle out the vast majority of Detroit citizens will be black with the majority of them on welfare, disability or living off a government job. If I were big money I would stay away.
That's racist!
Thanks JerseyanExile.
Looks like things are fixing to get interesting in Detroit.
Detroit emergency manager orders probe of city’s pension fund
http://www.detroitnews.com/article/20130620/METRO01/306200080
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