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

11 Updates
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

Source: IANS

 
Update
11

1 week 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 ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
10

1 week 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 ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
9

1 week 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 reti ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
8

2 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. Detro ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
7

2 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 ser ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
5

2 weeks ago

Historic bankruptcy trial starting in Detroit; city hopes to wipe out billions in debt

Sep 2 2014 12:21am CDT | Source: Canadian Business Online

DETROIT – Lawyers for Detroit will attempt to convince a federal judge at the city’s bankruptcy trial that its plans to wipe out billions of dollars in debt should be approved. After some delays, the start of the trial Tuesday in U.S. District Court comes just over 13 months after Detroit became the largest U.S. city to file for bankruptcy. Detroit expects to cut $12 billion in unsecured debt to about $5 billion, which is “more manageable,” according to Bill No ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
4

5 weeks ago

Creditor opposes Detroit debt plan, says scrap it

Aug 13 2014 12:37am CDT | Source: Topix

New York-based Syncora Guarantee said in a court filing that the plan put together by state-appointed emergency manager Kevyn Orr and attorneys hired by the city is unfair, will be too co ...
Source: Topix   Full article at: Topix
 

 
Update
3

5 weeks ago

Business Highlights

Aug 12 2014 5:05pm CDT | Source: Canadian Business Online

___ Airport tests new way to avoid deadly bird strikes NEW YORK (AP) — When birds and planes collide, the results can be deadly. That’s why airports around the world work hard to keep birds away, even resorting to shooting or poisoning large flocks. One Ohio airport is now experimenting with a new, gentler way to avoid bird strikes: planting tall prairie grass. Heavy birds like geese — which cause the most damage to planes — are beli ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
2

7 weeks ago

Control of Detroit water department placed in mayor’s hands after criticism of shutoffs

Jul 29 2014 2:06pm CDT | Source: Canadian Business Online

DETROIT – Control of Detroit’s massive municipal water department, which has been widely criticized by the United Nations and others for widespread service shutoffs to thousands of customers, has been returned to the mayor’s office. The move comes a week after the department said it would temporarily suspend shutoffs for customers who were 60 days or more behind on bills for 15 days, and a few months ahead o ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
1

8 weeks ago

Detroit retirees back pension cuts by a landslide

Jul 22 2014 4:47am CDT | Source: Topix

In a May 30, 2014 file photo, Detroit emergency manager Kevyn Orr speaks with reporters after addressing the Mackinac Policy Conference on Mackinac I ...
Source: Topix   Full article at: Topix
 

 

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