Home' Trinidad and Tobago Guardian : August 19th 2013 Contents A19
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By filing for bankruptcy, Orr prevented a mad
rush by worried creditors who could have sued
Detroit to collect their money.
A multi-day hearing on the eligibility question
is scheduled to start October 23.
"Anybody who opposes the filing can be heard
from," said experienced bankruptcy attorney and
law professor Anthony Sabino. "But they must
prove ... that they have legal standing to come to
court in the first place and be heard."
If creditors successfully remove Detroit from
bankruptcy protection it "would be nothing less
than catastrophic" for the city, he added, and would
throw Detroit to the "wolves."
"A key to bankruptcy is it stops all litigation and
attempts to collect debts," Sabino said. "This prevents
the dismembering of the assets of the entity."
Without bankruptcy s protective umbrella "it will
be sued and attacked in state court, federal court,
from all sides, by every creditor in sight, with uneven
and possibly unjust results," Sabino said. "The
wolves---creditors---will selfishly rend the city from
limb to limb, leaving scraps, if that, to the less pow-
Orr, serving an 18-month contract, had threatened
bankruptcy as an option when he took the job in
March. He met with more than 100 creditor rep-
resentatives in mid-June, laying out plans that asked
many to take ten cents on the dollar or less.
After getting authorisation from Michigan
GovenorRick Snyder, Orr filed for bankruptcy on
Detroit s behalf just over a month later.
Union leaders and officials with the city s employ-
ee pension systems have said the filing violates the
Michigan Constitution, which they believe protects
accrued municipal pension benefits. Orr said federal
bankruptcy law trumps state law.
A restructuring team representing Detroit s Police
and Fire Retirement System and General Retirement
System will file objections by Monday s deadline,
spokesman Bruce Babiarz told The Associated Press
on Thursday. He said the group believes the gov-
ernor s bankruptcy authorisation was unconstitu-
Bankruptcy filings show the pension systems are
the top two unsecured creditors. The city has about
21,000 retired workers who are owed benefits, with
underfunded obligations of about US$3.5 billion
for pensions and US$5.7 billion for retiree health
Several other creditors contacted by The Asso-
ciated Press, including National Public Finance
Guarantee Corp and BlackRock s Municipal Bonds
Group, declined to comment on whether they would
make an objection filing by Monday.
The city has until September 6 to file its responses
to any objections by creditors, which number in
the thousands and include corporations, large and
small companies, and individuals.
"Given the scope of the financial issues faced by
Detroit, I anticipate that the Chapter 9 filing will
be upheld notwithstanding any objections that are
filed," said George B South III, a partner with DLA
Piper s Restructuring group in New York.
But Bernstein said such objections have worked
to get some municipal bankruptcy petitions tossed
"It has worked in Boise County, Idaho, on the
basis they were not insolvent," Bernstein said. "Har-
risburg, Pennsylvania s, bankruptcy was thrown out
on the basis it was not authorised by state law."
By the end of the year, the city hopes to submit
a plan to emerge from bankruptcy.
"Detroit has jumped into the bankruptcy pool
with both feet," Sabino said. "Now that it s there,
it needs the process to work out of its problems."
State-appointed emergency manager Kevyn
Orr, right, and Michigan Gov. Rick Snyder,
address reporters during a news conference
in Detroit after Orr asked a federal judge for
bankruptcy protection. AP PHOTO
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