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

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Detroit bankruptcy raises red flags in other US cities
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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
6

7 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 ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
5

7 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 on a blight removal task force that look ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
4

7 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 d ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
3

8 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 debt. ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 
Update
2

8 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 co ...
Source: Canadian Business Online   Full article at: Canadian Business Online
 

 

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