Detroit’s historic bankruptcy trial begins
In this July 16, 2013 aerial file photo, the downtown of the city of Detroit is shown. Detroit Emergency Manager Kevyn Orr raised more than a few eyebrows a year ago when he took the city into bankruptcy and predicted it would be out by the time his term expired in fall 2014. Because it is by far the largest city to file for municipal bankruptcy and the issues were so complex many experts predicted it would take years to resolve. But the city will take a major step toward that goal with a trial in federal bankruptcy court that starts Tuesday, Sept 2, 2014. (AP Photo/Paul Sancya, File)
Opening statements in Detroit’s historic bankruptcy trial have begun in federal court.
Attorney Bruce Bennett, one of the city’s lawyers, began opening statements yesterday afternoon before Judge Steven Rhodes.
Bennett said progress “has been made, but the city is still in distress.”
Detroit expects to cut $12 billion in unsecured debt to about $5 billion.
Most creditors, including more than 30,000 retirees and city employees, have endorsed the restructuring plan put together by state-appointed emergency manager Kevyn Orr and his team.
One of the keys is a commitment from the state, corporations and foundations to donate $800 million to soften cuts to city pensions. In return, city artwork would be protected from being sold.
Bond insurer Syncora Guarantee opposes the plan and says Detroit has unfairly discriminated against financial creditors.