Detroit raced toward this week's bankruptcy trial
By Corey Williams, AP
September 2, 2014, 12:03 am TWN
DETROIT, Michigan -- It took decades of mismanagement, malfeasance and meltdowns in its bread-and-butter manufacturing sector for Detroit to hit fiscal rock bottom. The path to exit bankruptcy could take less than a year and a half.
After some delays, the confirmation trial for the largest municipal bankruptcy in U.S. history is scheduled to start Tuesday.
Massive debt, thousands of creditors and complex union and pension issues had many experts thinking Detroit's bankruptcy would take years to resolve, considering two California cities — Stockton and San Bernardino — filed a year before Detroit did and still haven't settled on plans.
Detroit expects to cut US$12 billion in unsecured debt to about US$5 billion, which is “more manageable,” according to Bill Nowling, a spokesman emergency manager Kevyn Orr.
“None of it will get wiped out until the plan is confirmed and the judge issues an effective date,” Nowling told The Associated Press. “And it happens really fast after that.”
Orr, a turnaround specialist who represented automaker Chrysler LLC during its successful restructuring, was appointed by Michigan's Republican governor in March 2013 to fix Detroit's finances. His contract expires at the end of September. His restructuring team set an aggressive timetable and bankruptcy Judge Steven Rhodes also quickly named mediators to work out deals with creditors, added Nowling.
“I think — with the exception of a few remaining holdouts — all of our creditors recognized we could not let the city languish in endless bankruptcy proceedings,” Nowling said.