THE DETROIT BANKRUPTCY IS A STEP OF PROGRESS

Am re-posting our bankruptcy-law analysis of the Detroit bankruptcy. Updating it, too.

The issue of pension obligations has come to dominate the bigger picture of this bankruptcy. it shouldn’t, for the reasons given in this article. Pensioners will be treated as a separate creditor class, one whose vote to approve any reorganization plan must be given, or the plan cannot be confirmed by the Court.

There is also now a campaign going on to elect a new Mayor, as current mayor Dave Bing declined to run again. Much is being made of the new Mayor’s lack of authority over a city being run by a court-appointed manager. The much being made is beside the point.The campaign raises all sorts of vital issues ; the future of the city — toward what goal or goals / who will be involved / How long will it take ? what about race relations inside the city ? crime ?  schools ? Businesses and zoning ?

All of these will be discussed by the City;s voters, and when, eventually, the mayor to be elected does take control — and that will happen once the City gets its reorganization plan conformed by the court — the discussions and decisions made in this Mayor campaign will ground whatever city will be built thereupon.

Game on. Let the politics begin.

— Michael Freedberg / Here and Sphere

 

Here and Sphere

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^ Detroit : on the move at Movement

Three weeks ago Here and Sphere published Susan Domitrz-Sapienza’s extensively researched story on the comeback of Detroit. As she noted, the economy of “Automobile City” had already reached its bottom and was — and is now — expanding along several lines newly established. The decision of the city’s state-appointed manager to file a Chapter 9 (Municipal) bankruptcy petition would seem, at first, to contradict our reporter’s finding. In fact, the Chapter 9 filing conforms our reporter’s conclusion.

To learn why, one needs to know a bit more about bankruptcy law than the common perception. Most people think of the word “bankruptcy” as the end, a kind of giving up the ghost. This perception is false. There are two kinds of bankruptcy cases. The one that most people think of is “liquidation,” in a liquidation, yes: the petitioner is in fact giving up…

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Author: hereandsphere

Here and Sphere is an online journal of news, opinion, reviews, advice, & bits n' pieces of everything else - from HERE to SPHERE...... Co-founded by Michael Freedberg, a long-time Boston Phoenix journalist, and Heather Cornell, a South Coast Massachusetts columnist and editor.

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