Tuesday, August 27, 2013

Detroit Bankruptcy Judge Partly Speeds Eligibility Fight


Detroit’s bankruptcy judge will hear some legal arguments one month earlier than planned about why the record-setting, $18 billion case should be thrown out.

U.S. Bankruptcy Judge Steven Rhodes will also block until later on in the case objections related to any potential cuts to city-worker pensions, saying that fight should wait until a plan to adjust the city’s debt has been filed.

Any objections to the city’s bankruptcy that don’t involve a dispute over facts, only the interpretation of legal issues raised by creditors, will be heard on Sept. 18 in federal court in Detroit, Rhodes said in an order released today.

“The court further concludes that a prompt oral argument on these legal issues will promote just, speedy and efficient determination of the city’s eligibility,” he wrote. The original hearing on eligibility, set for Oct. 23, will remain unchanged and will be reserved for disputes over facts.

Since the city filed the biggest-ever U.S. municipal bankruptcy, Rhodes has kept the case moving quickly, pushing up a timetable suggested by Detroit’s emergency manager, Kevyn Orr, and setting earlier deadlines than some parties in the case had requested.

Orr has said he wants to get Detroit out of bankruptcy by September 2014, the same month he could be removed from his post by the city council. He and Michigan Governor Rick Snyder, who appointed him, both conceded in interviews last month that their deadline would be difficult to meet.

Individual Objectors

Rhodes also set aside a day for citizens, city workers and others who filed individual objections to the case to make their arguments to the court on Sept. 19. He said 109 parties have filed objections to the city’s bankruptcy filing.

Unlike businesses and individuals, municipalities must first prove they are eligible to remain in bankruptcy after filing their petition for court protection.

The case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

To contact the reporters on this story: Steven Church in Wilmington, Delaware, at

To contact the editor responsible for this story: Andrew Dunn at

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