I believe you but then I would think the Union would want Detroit’s money under court control so they could get a sweet heart deal similar to the GM union scum. If the city isn’t allowed to go bankrupt they control who gets paid and who doesn’t. With the city manager no friend of the union I would think you would see the city pay everything but the Union related debts.
Perhaps I am conflating individual bankruptsy scenarios with whatever it is that happens when a city goes belly up.
Theoretically and historically, the appointment of a judge, master or arbitrator has been to bring fairness and confidence into the resolution of a contract when it is impossible for all contractual obligations to be fulfilled.
Lately these positions may be held by politically biased individuals (either way), thus bringing instability back into the process.
We (and Detroit) are between a rock and a hard place.