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  • Detroit files bankruptcy

    Breaking - the link is a tad behind events -

    http://www.usatoday.com/story/news/n...riday/2552819/

    DETROIT -- The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, laying the groundwork for a historic effort to bail out a city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue.

    The bankruptcy filing makes Detroit the largest city in U.S. history to do so.

    The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.

    Detroit Emergency Manager Kevyn Orr, who in June released a plan to restructure the city's debt and obligations that would leave many creditors with much less than they are owed, has warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection.

    Michigan Gov. Rick Snyder would have to sign off on the filing. A spokeswoman did not immediately return telephone calls Thursday.

    Orr's spokesman Bill Nowling would not confirm Thursday that the filing is imminent. However, he said, "Pension boards, insurers, it's clear that if you're suing us, your response is 'no.' We still have other creditors we continue to have meetings with, other stakeholders who are trying to find a solution here, because they recognize that, at the end of the day, we have to have a city that can provide basic services to its 700,000 residents."

    This week, the city's two pension funds (which have claims to $9.2 billion in unfunded pension and retiree health care liabilities) filed suit in state court to prevent Orr from slashing retiree benefits as part of a bankruptcy restructuring.

    Ambac Assurance Guaranty, which insures some of the city's general obligation bonds, has also objected to Orr's plan to treat those bonds as "unsecured," meaning they're not tied directly to a revenue stream and would receive pennies on the dollar of their value. Ambac, and other creditors, have threatened to file suit.

    Sources agree that Orr's deal with creditors, widely reported to be Bank of America Corp. and UBS AG, to pay a $344-million swap with a $255-million debtor-in-possession loan, is instrumental in the timing of the potential bankruptcy filing.

    The deal gives the city access to $11 million a month in casino tax revenues that Orr has said is key to maintaining city services while negotiations, in or out of bankruptcy court, take their course with other creditors and unions.

    Plunkett Cooney bankruptcy lawyer Doug Bernstein, who is not involved in the bankruptcy and is not representing any parties related to it, said Thursday he had no direct information about whether or when the city would file, but said he understands the strategy if the city were to do so Friday or perhaps over the weekend.
    >
    Dr. Mordrid
    ----------------------------
    An elephant is a mouse built to government specifications.

    I carry a gun because I can't throw a rock 1,250 fps

  • #2
    Where are the car US factories and the tax revenue generated by them?

    What's the reason for Detroit dropping so badly from prosperous to bad city.

    Comment


    • #3
      Auto manufacturing is no longer as centralized in Michigan as it used to be. Parts and entire cars are made in Canada and Mexico and China. Detroit lost a lot of ground to the Japanese after the 1973-74 oil crunch. They couldn't adapt to the change in demand from big muscly cars to small efficient ones quickly enough and when they did the cars tended to be junky. It was mostly downhill from there and the free trade agreements with China were pretty much the last nail in the coffin as far as labor costs are concerned. The factories and the jobs go where the cost of production is lower. They say those jobs will never come back. But it's possible, if the cost of production in the US ever falls below the CoP in the lowest 3rd world nation you can find.

      Comment


      • #4
        There are some MAJOR developments going on in the city totaling well over $2B, but the finances are a mess, there are ~80,000 vacant buildings & homes to be demolished and the properties rehabbed.

        Until the services are restored (40% of street lights broke, police response averages 58 min to never, EMS is a disaster, 92.5% of crimes are unsolved) and the homicide rate drops below the Ivory Coast (48/100,000 - US avg is 4.7 and dropping) people will not return, and neither will the tax base.

        There are parts of Detroit I wouldn't go into unless I were heavily armed (more than usual) in a Stryker or other armored vehicle. Just yesterday a guy found a mortar round on the back porch of a house he'd just bought. About a year ago a property was bought and they found a crate of grenades.
        Last edited by Dr Mordrid; 19 July 2013, 00:21.
        Dr. Mordrid
        ----------------------------
        An elephant is a mouse built to government specifications.

        I carry a gun because I can't throw a rock 1,250 fps

        Comment


        • #5
          The Schiff Report (7/19/2013)Listen to The Peter Schiff ShowLive Weekdays 10am to noon ET on http://www.SchiffRadio.comBuy my newest book at http://www.tiny...


          Here's Peter Schiff comment on Detroit.

          How do you guys see homeland security purchase of billion of hollow point ammo?

          Comment


          • #6
            Hollow point, mostly all Federal Tactical HST, is a standard law enforcement round here. The purchases have been in batches of 450M a year, not billions, and that is a reserve budget entry for up to that amount.

            Federal HST is used by about every alphabet soup agency including Homeland Security (who do the procurement for all), Customs, the FBI, US Marshals, Secret Service, Air Marshals Service, the US State Dept. diplomatic and agency security services, and some military; the investigative and security groups including NCIS, the Coast Guard etc.

            The burn through rate for (constant) training, certification and recertification is enormous. Just as a civilian with a concealed weapons permit I hit the range at least 2-3 times a month, burning through 600-1,000 rounds a month.
            Last edited by Dr Mordrid; 20 July 2013, 14:08.
            Dr. Mordrid
            ----------------------------
            An elephant is a mouse built to government specifications.

            I carry a gun because I can't throw a rock 1,250 fps

            Comment


            • #7
              Feel sorry for the retired city workers who could now miss out on their pensions..
              paulw

              Comment


              • #8
                Originally posted by paulw View Post
                Feel sorry for the retired city workers who could now miss out on their pensions..
                That's what the US Pension Benefit Guaranty Corporation is for. It insures pensions up to about $4,600/month.
                Last edited by Dr Mordrid; 20 July 2013, 16:26.
                Dr. Mordrid
                ----------------------------
                An elephant is a mouse built to government specifications.

                I carry a gun because I can't throw a rock 1,250 fps

                Comment


                • #9
                  A bit on 3 items - the bankruptcy being stayed by a state court judge, the federal bankruptcy judge and a cop in trouble.

                  The supervisor of Detroit's Homeland Security Division was placed on suspension and will likely be fired for texting pictures of his penis to a female co-worker. 'Nuff said on that.

                  A state court judge who's in the pocket of the public employee unions tried to stop the bankruptcy by staying it. The Michigan Appeals Court promptly stayed HER order, halting things. More rulings from the federal bankruptcy judge tomorrow. He can apply a stay to ALL state court actions and rule on those issues himself.

                  Now mord on the federal bankruptcy judge -



                  Detroit’s bankruptcy, the largest municipal collapse in U.S. history, will be overseen by a 28- year veteran of the bench and writer on Ponzi-scheme law who’s taking on the biggest case of his career.

                  U.S. Bankruptcy Judge Steven W. Rhodes, 64, was assigned the case by Alice Batchelder, the chief judge for the U.S. Court of Appeals in Cincinnati, following recommendations by lower-court judges in Detroit, according to a court order filed Friday.

                  “It is our unanimous and very strong belief that Honorable Steven W. Rhodes is the bankruptcy judge best qualified to preside over the city of Detroit Chapter 9 case,” Phillip Shefferly, chief of the U.S. Bankruptcy Court in Detroit, wrote in a letter filed with the court.

                  Detroit filed the biggest U.S. municipal bankruptcy on Thursday, a move the city’s emergency manager, Kevyn Orr, said was the only way to deal with a debt load of $18 billion. The city’s bid for a turnaround is now in the judge’s hands.

                  Rhodes, a graduate of the University of Michigan Law School, probably welcomes the challenge of overseeing the case, said Sheryl Toby, a bankruptcy attorney at the Dykema law firm in Bloomfield Hills. He is set to retire at the end of the year and take on senior status as a judge, she said.

                  “He stepped up for it clearly, and he didn’t have to,” she said.

                  A call to the judge’s office in Detroit after regular business hours seeking comment on his appointment wasn’t immediately returned.

                  Rhodes is a co-author of “The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes, published by LexisNexis. The book’s website quotes Irving Picard, the bankruptcy trustee for Bernard Madoff’s defunct investment firm, as calling it “one- stop shopping for the facts needed to understand the complex fall-out from a collapsed Ponzi scheme.”

                  Rhodes handled the bankruptcy reorganization of Southfield-based auto-parts maker Collins & Aikman Corp. In 2007, he approved a liquidation plan for the maker of auto interiors.

                  He also served as chief judge of the bankruptcy court in Detroit when it changed its rules at the end of 2008 in an effort to make it a more attractive venue for carmakers to reorganize. Still, General Motors and Chrysler filed for bankruptcy in New York the following year.

                  While under court protection, Detroit can stop paying some debts, is temporarily shielded from lawsuits and can ask the judge to cancel contracts, including union agreements.

                  The filing came after months of negotiations between Orr, who was picked by Gov. Rick Snyder, and creditors that included pension funds for retired city workers. The funds said they were “dismayed” by the filing and are still battling to get the bankruptcy rescinded.

                  Rhodes is a skilled manager of the courtroom who keeps cases moving and won’t be swayed by public opinion that will come with such a high-profile case, said Judy Calton, an bankruptcy partner at Honigman Miller Schwartz & Cohn LLP in Detroit.

                  “He’s sterling at managing everything and moving the case,” she said. “He’ll keep people’s feet to the fire, and he’ll rule.”
                  Dr. Mordrid
                  ----------------------------
                  An elephant is a mouse built to government specifications.

                  I carry a gun because I can't throw a rock 1,250 fps

                  Comment


                  • #10
                    A bit on 3 items - the bankruptcy being stayed by a state court judge, the federal bankruptcy judge and a cop in trouble.

                    The supervisor of Detroit's Homeland Security Division was placed on suspension and will likely be fired for texting pictures of his penis to a female co-worker. 'Nuff said on that.

                    A state court judge who's in the pocket of the public employee unions tried to stop the bankruptcy by staying it. The Michigan Appeals Court promptly stayed HER order, halting things. More rulings from the federal bankruptcy judge tomorrow. He can apply a stay to ALL state court actions and rule on those issues himself.

                    Now more on the federal bankruptcy judge -



                    Detroit’s bankruptcy, the largest municipal collapse in U.S. history, will be overseen by a 28- year veteran of the bench and writer on Ponzi-scheme law who’s taking on the biggest case of his career.

                    U.S. Bankruptcy Judge Steven W. Rhodes, 64, was assigned the case by Alice Batchelder, the chief judge for the U.S. Court of Appeals in Cincinnati, following recommendations by lower-court judges in Detroit, according to a court order filed Friday.

                    “It is our unanimous and very strong belief that Honorable Steven W. Rhodes is the bankruptcy judge best qualified to preside over the city of Detroit Chapter 9 case,” Phillip Shefferly, chief of the U.S. Bankruptcy Court in Detroit, wrote in a letter filed with the court.

                    Detroit filed the biggest U.S. municipal bankruptcy on Thursday, a move the city’s emergency manager, Kevyn Orr, said was the only way to deal with a debt load of $18 billion. The city’s bid for a turnaround is now in the judge’s hands.

                    Rhodes, a graduate of the University of Michigan Law School, probably welcomes the challenge of overseeing the case, said Sheryl Toby, a bankruptcy attorney at the Dykema law firm in Bloomfield Hills. He is set to retire at the end of the year and take on senior status as a judge, she said.

                    “He stepped up for it clearly, and he didn’t have to,” she said.

                    A call to the judge’s office in Detroit after regular business hours seeking comment on his appointment wasn’t immediately returned.

                    Rhodes is a co-author of “The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes, published by LexisNexis. The book’s website quotes Irving Picard, the bankruptcy trustee for Bernard Madoff’s defunct investment firm, as calling it “one- stop shopping for the facts needed to understand the complex fall-out from a collapsed Ponzi scheme.”

                    Rhodes handled the bankruptcy reorganization of Southfield-based auto-parts maker Collins & Aikman Corp. In 2007, he approved a liquidation plan for the maker of auto interiors.

                    He also served as chief judge of the bankruptcy court in Detroit when it changed its rules at the end of 2008 in an effort to make it a more attractive venue for carmakers to reorganize. Still, General Motors and Chrysler filed for bankruptcy in New York the following year.

                    While under court protection, Detroit can stop paying some debts, is temporarily shielded from lawsuits and can ask the judge to cancel contracts, including union agreements.

                    The filing came after months of negotiations between Orr, who was picked by Gov. Rick Snyder, and creditors that included pension funds for retired city workers. The funds said they were “dismayed” by the filing and are still battling to get the bankruptcy rescinded.

                    Rhodes is a skilled manager of the courtroom who keeps cases moving and won’t be swayed by public opinion that will come with such a high-profile case, said Judy Calton, an bankruptcy partner at Honigman Miller Schwartz & Cohn LLP in Detroit.

                    “He’s sterling at managing everything and moving the case,” she said. “He’ll keep people’s feet to the fire, and he’ll rule.”
                    Dr. Mordrid
                    ----------------------------
                    An elephant is a mouse built to government specifications.

                    I carry a gun because I can't throw a rock 1,250 fps

                    Comment


                    • #11


                      Judge says orders 'enhance the likelihood of a Chapter 9 reorganization' for Detroit

                      Detroit -- A federal judge has frozen all lawsuits against the city, a move that clears the path for the future of Detroit's historic Chapter 9 filing to be decided in bankruptcy court.


                      U.S. Bankruptcy Judge Steven Rhodes issued his order Wednesday after hearing two hours of arguments from lawyers representing the city and creditors who alleged the bankruptcy filing was not valid and was designed to slash retiree benefits.

                      "My orders enhance the likelihood of a Chapter 9 reorganization, speeds the bankruptcy case and cuts costs to taxpayers," Rhodes said.

                      The judge also decided that an automatic stay triggered by Detroit's Chapter 9 filing extends to Emergency Manager Kevyn Orr, Gov. Rick Snyder and members of the restructuring team as well as state Treasurer Andy Dillon.

                      But the judge did not rule that Detroit is eligible to file Chapter 9. A decision on that will come later.
                      >
                      Dr. Mordrid
                      ----------------------------
                      An elephant is a mouse built to government specifications.

                      I carry a gun because I can't throw a rock 1,250 fps

                      Comment

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