360° Coverage : Detroit bankruptcy raises red flags in other US cities

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Detroit bankruptcy raises red flags in other US cities
Photo Credit: Bill Pugliano, Getty Images

Detroit bankruptcy raises red flags in other US cities

Jul 23 2013, 4:36am CDT | by IANS

Washington, July 23 (IANS) Even as a federal judge set a hearing on a challenge to a bankruptcy filing by Detroit, America's famed automotive city, questions are being raised about the fate of several other debt-crushed major US cities.

Washington, July 23 — Even as a federal judge set a hearing on a challenge to a bankruptcy filing by Detroit, America's famed automotive city, questions are being raised about the fate of several...

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1 year ago

Detroit bankruptcy raises red flags in other US cities

Jul 23 2013, 4:36am CDT | by IANS

Washington, July 23 (IANS) Even as a federal judge set a hearing on a challenge to a bankruptcy filing by Detroit, America's famed automotive city, questions are being raised about the fate of several other debt-crushed major US cities.

Washington, July 23 — Even as a federal judge set a hearing on a challenge to a bankruptcy filing by Detroit, America's famed automotive city, questions are being raised about the fate of several other debt-crushed major US cities.

The federal judge overseeing Detroit's bankruptcy filing would hold a hearing Wednesday to determine whether a lawsuit by retired public employees can block it, according to the New York Times. The judge, Steven Rhodes of US Bankruptcy Court, agreed to the hearing requested by Detroit's emergency manager in response to a Michigan judge's ruling that the city's bankruptcy filing violated the state's Constitution because it could cut city workers' pensions.

The emergency manager, Kevyn D. Orr, had filed a motion asking that the city be protected from litigation as it proceeds with its historic bankruptcy filing, made last week.

At the heart of Detroit's problem is a growing unfunded debt on benefits owed to current and future retirees - some $3.5 billion,- which mirrors a circumstance being seen across the US, according to Orr, as cited by Detroit Free Press.

While many smaller cities have filed for bankruptcy, most notably California's Stockton and San Bernardino in 2012, no other city of Detroit's size appears to be on the cusp of imminent financial collapse, according to Fox News.

However, those bankruptcy filings together have resulted in speculation about whether more are on the horizon.

Other cities now on the radar include Cincinnati, Minneapolis, Portland, Oregon, and Santa Fe, New Mexico-following Moody's saying in April that they and 11 other municipalities were being reviewed for a possible credit downgrade, it said.

The situation is highlighted by a Pew Charitable Trusts Study of 61 major US cities that found they collectively had enough money to cover 74 percent of pension liabilities but only 6 percent of health care liabilities, Fox News said.

The total difference between what the cities owed to retired employees and what was covered equalled $217.2 billion, according to the report, "A Widening Gap in Cities," released in January.

(Arun Kumar can be contacted at arun.kumar@ians.in)

IANS

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Update
11

4 weeks ago

Kevyn Orr testifies that bond insurer challenges to Detroit bankruptcy would have been costly

Oct 2 2014 10:44am CDT | Source: Canadian Business Online

DETROIT – Emergency manager Kevyn Orr says it would have cost the city big to fight bond insurer Syncora Inc.’s challenges to Detroit’s bankruptcy. Orr testified Thursday in Detroit’s bankruptcy trial that legal fees were anticipated at $5 million to $10 million. He told federal Judge Steven Rhodes that Syncora opposed the city’s use of some casino tax revenue, Detroit’s bankruptcy eligibility and a loan to improve quality of life in the ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
10

4 weeks ago

Quicken Loans’ Gilbert testifies in Detroit bankruptcy trial, points out city’s challenges

Oct 1 2014 11:06am CDT | Source: Canadian Business Online

DETROIT – Businessman Dan Gilbert has testified during Detroit’s bankruptcy trial that the city’s high crime rate, poor school system, unemployment and blighted neighbourhoods are its major challenges. The founder of mortgage lender Quicken Loans also said Wednesday that $850 million is needed to wipe out Detroit’s blight, which includes tens of thousands of abandoned houses and trash-filled lots. Gilbert was one of the leaders o ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
9

4 weeks ago

Kevyn Orr: No discussions taking place on new job until Detroit clears historic bankruptcy

Sep 28 2014 11:26am CDT | Source: Canadian Business Online

DETROIT – Emergency manager Kevyn Orr’s success in shepherding Detroit through its historic bankruptcy will leave him — at least temporarily — out of a job when, and if, his task in the Motor City is complete. The turnaround expert says he has given no thought to what he will do once Detroit’s bankruptcy trial ends. The trial to determine if a judge will accept Orr’s plan to shed billions of dollars in debt while improving city services co ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
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8

5 weeks ago

Detroit’s finances removed from state oversight, returned to elected mayor and City Council

Sep 25 2014 8:29pm CDT | Source: Canadian Business Online

DETROIT – The Detroit City Council unanimously approved a resolution to take back control of daily city operations while retaining state-appointed emergency manager Kevyn Orr to oversee bankruptcy matters until they are resolved. The action came more than a year after Orr took the city into the largest municipal bankruptcy in U.S. history and in the middle of a trial in which a federal judge will decide whether to approve Orr’s plan for the city to emerge from billions of dollars in ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
7

5 weeks ago

Detroit City Council vote could give elected officials more control, keep emergency manager

Sep 25 2014 4:46pm CDT | Source: Canadian Business Online

DETROIT – The Detroit City Council is expected to vote on a plan to transfer daily operations to elected officials while retaining Emergency Manager Kevyn Orr to oversee bankruptcy matters until they are resolved. The council is meeting Thursday evening at City Hall to vote on the measure. Orr’s spokesman Bill Nowling says the exit becomes effective when the restructuring plan is approved in bankruptcy court. Orr’s 18-month contract leading the city’s f ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
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5

7 weeks ago

Detroit reaches deal with key creditor that may clear major stumbling block in bankruptcy case

Sep 9 2014 6:39pm CDT | Source: Canadian Business Online

DETROIT – Detroit has reached a tentative deal with one of its key creditors that could remove the biggest stumbling block in the city’s plan to reduce its debts and emerge from federal bankruptcy protection. A court filing Tuesday evening says that Detroit and the bond insurer Syncora Guarantee “have reached an agreement in principle” to settle the company’s $400 million claim in the nation’s largest-ever municipal bankruptcy case. The two sides ask Judge Steven Rhodes for ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
4

7 weeks ago

Detroit, suburban leaders announce deal to turn water department into a regional agency

Sep 9 2014 10:50am CDT | Source: Canadian Business Online

DETROIT – The Detroit water department would be turned into a regional agency with a 10-year limit on rate increases and an infusion of millions of dollars from the suburbs, under a deal announced the mayor and other officials announced Tuesday. Only two of the governing board’s six members would be appointed by Detroit, but rate increases would need approval from five. The Water and Sewerage Department provides water to people in eight counties, approximately 40 per cent ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
3

7 weeks ago

Detroit bankruptcy trial resuming; judge must decide if exit plan is fair, feasible

Sep 8 2014 7:02am CDT | Source: Canadian Business Online

DETROIT – A trial to determine Detroit’s path out of bankruptcy is entering its first full week after four days of evidence last week. Judge Steven Rhodes heard from the city’s chief financial officer as well as a consultant who talked about a plan to use $1.7 billion to improve services over the next decade. The judge must decide whether Detroit’s plan is fair and feasible. Virtually all creditors, including thousands of retirees, are endorsing it, although bond insurers are opposed because th ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
2

8 weeks ago

Detroit CFO testifies in bankruptcy trial, says internal financial controls were ‘very poor’

Sep 4 2014 11:27am CDT | Source: Canadian Business Online

DETROIT – The chief financial officer Detroit hired just before the city was allowed into bankruptcy testified Thursday that the office had trouble keeping track of how much money was coming in and going out. A computer system designed to track the city’s finances had not been fully implemented when he took the job in late November, John Hill Jr. said during the third day of Detroit’s historic bankruptcy trial. Detroit’s internal controls over financial reporting were “very, very poor,” Hil ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
1

8 weeks ago

Where things stand at start of the trial for Detroit’s plan to exit bankruptcy

Sep 2 2014 1:19pm CDT | Source: Canadian Business Online

DETROIT – More than a year after Detroit filed for the largest public bankruptcy in U.S. history, a federal judge is hearing evidence on whether he should approve the city’s plan to emerge from billions of dollars in debt. Here’s a look at the past, present and future of the city’s finances: AT STAKE For decades, Detroit paid its bills by borrowing money while struggling to provide the most basic of services for residents. The city, once fueled b ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 

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