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.
" Also Thursday, Orr signed an order authorizing an investigation of the city’s pension funds, including its investments and management. The investigation is expected to conclude in 60 days with a report from the auditor and inspector general. At that time, Orr will know whether he needs to remove the pension funds’ trustees and have state Treasurer Andy Dillon appoint a sole trustee. Orr told The News on Monday that he is might install a professional financial manager to oversee investments."
Wow...
Multiple Hints here..
* 1st, we will get the real numbers and look into who's running these things.
* Which makes you wonder, if Orr is sending a warning we think their is hanky-panky going on
* And again no BS numbers for this guy, these numbers will be the numbers and not political spin.
* And most important look, we may give you a new Trustee ( my guess is they won't like Andy Dillon)
* And we will hire a professional financial manager to oversee investments...
Imagine that, One professional firm, hmm, is Orr reading my post? A while back I said go with a low-load firm like Vanguard. No matter who he picks my guess is they will have gravitas and it won't be political hacks and lackies picking the investments.
Multiple Paradigm Shifts to right this sinking ship and running this by GAAP and FASB standards so that somepoint, maybe they can sell Bonds again...
Again I say, this is all gonna go over like a loud Fart in Church...
You should repost that over here for the usual “let it burn” crowd.
http://www.freerepublic.com/focus/f-chat/3033608/posts
Personally, I think “fixing” Detroit is a really good thing that could be a real feather in the GOP cap for the future. The reverend behind the Runaway Slave movie is speaking in Detroit this weekend with Americans for Prosperity and the Fredrick Douglas foundation. I really do think we’re making some inroads with blacks because of this sort of thing.
Agreed!
Just like the guy in Louisiana that just switched parties!
I am not sure they want to listen. As someone who followed the Ford turnaround, discussing it with relatives in blue-states, they acted like could shive a git. When the funny part of it is, if their kids grow up to take Business-301, they prolly have to read about it, and maybe do a serious paper on it...
Again I am not sure they would want to hear the machinations of what it takes to fix something, or watch a Maestro in progress whether it is Orr or Mulally. These guys are not just good, they are the Wayne Gretzy of their arena's they come along once in a blue moon and you can't help but root for them to turn something around.
For those that are disinterested, I can't fix stupid, they can go turn on Dancing with the Vaguely Familiar.
Detroit is broke and it Detroit’s fault, including is residents. Detroit does not deserve civic pride. It does deserve to be pillaged, looted, and burned. If the city has assets that can be sold to meet their financial obligations, they need to be seized and sold.
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