From Reuters, the Bankruptcy Court has set the date for initial oral arguments on Detroit’s eligibility under the bankruptcy code. The date set is much sooner than originally anticipated.
Judge Steven Rhodes ordered late Monday that initial oral arguments in the case begin on September 18, well ahead of the October 23 date he originally scheduled for the start of the trial on the issue of eligibility.
Detroit filed the largest municipal bankruptcy in U.S. history on July 18. Kevyn Orr, Detroit’s state-appointed emergency manager, has said he wants the city to be out of bankruptcy court by the time his term as emergency manager is scheduled to end in the fall of 2014.
Monday’s order was the latest sign that Rhodes wants to set an aggressive timetable to move the city through bankruptcy court.
“A prompt oral argument on these legal issues will promote just, speedy and efficient determination of the city’s eligibility to be a debtor” under the bankruptcy code, Rhodes wrote on Monday.
Rhodes also said he would delay hearing objections to the bankruptcy that center on potential cuts to retiree pensions, which unions and retiree groups argue are protected by the Michigan state constitution.
The judge wrote in his order that he “appreciates the extraordinary importance of the pension rights,” but he will not consider arguments about potential cuts to pensions until after he decides whether the city is eligible for bankruptcy.
The eligibility argument will center on whether Detroit is insolvent, whether the city negotiated in good faith with its creditors, or whether there were too many creditors to make negotiations feasible.
The bankruptcy code requires only that Detroit’s emergency manager, Kevyn Orr, prove that the city is insolvent, Rhodes wrote, adding that the city does not need to “prove that any particular plan that it might later propose is confirmable.”
Bill Nowling, Orr’s spokesman, said Tuesday that delaying a decision on the pension funds until the city has filed a restructuring plan with the court was appropriate.
“We think the judge is absolutely right to say that that’s a plan of adjustment issue and should be litigated during that phase of the proceedings.”
Reuters: http://www.reuters.com/article/2013/08/27/us-usa-detroit-bankruptcy-idUSBRE97Q0K820130827
