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Thread: Detroit files bankruptsy!

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    I can't believe it's an admin COMMUNITY SUPPORTER Bront's Avatar
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    Detroit files bankruptsy!

    Linkie
    Detroit filed for bankruptcy Thursday afternoon, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.

    The bankruptcy was filed by Emergency Manager Kevyn Orr and approved by Michigan Gov. Rick Snyder. Snyder said the financial condition of the city left him no choice, and that Detroit could not meet its obligation to either its citizens or its creditors.

    "The only feasible path to ensuring the city will be able to meet obligations in the future is to have a successful restructuring via the bankruptcy process," Michigan Gov. Rick Snyder said in the letter authorizing the filing.

    But public employee unions are sure to fight the move.

    Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion. Orr's reorganization plan calls for cutting $11.5 billion in debt down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time.

    Detroit city employees, retirees: Tell us how this affects you

    But cutting retiree's pensions in a municipal bankruptcy has never been done before, said Michael Sweet, a California bankruptcy attorney.

    "It's relatively easy to blow off a creditor. It's much harder when it's people who are the fabric of your community," he said. "You need a police force, you need a fire department. You're saying [to them] you're not worth what you were previously promised."

    Sweet said case law on whether pensions can be cut this way is very limited, and it could take years for a court fight over pension cuts to work its way to the U.S. Supreme Court. Given the poor state of funding for many public sector pension funds nationwide, "it's a big enough question, that (the Supreme Court) is where it likely will have to go," he said.

    Related: Detroit halts debt payments, plans pension cuts

    When employees of a bankrupt business lose their promised pensions, the Pension Benefit Guarantee Corp. steps in and provides a minimal level of benefits. But that federal agency doesn't back pensions in the public sector.

    Snyder spokeswoman Sara Wurfel said the decision to file for bankruptcy came after careful deliberation.

    "This has been a huge problem for decades and it's come to a crisis point," she said. "The emergency manager tried to work with all the creditors, including pensioners."

    Retirees and city employees say they can't accept cuts in their pension benefits.

    "How am I supposed to live without my pension?" said David Sole, 65, after a protest in Detroit last month. Sole retired from the city's water department in January after 22 years.

    Investors say the bankruptcy will make it more difficult for cities and towns everywhere to raise the money they need to build bridges, schools and other infrastructure. It will also hurt municipal bonds held by individual investors. There are more than $1 trillion worth of bonds at risk, said Peter Hayes, head of municipal bonds at BlackRock. He said there will be a ripple effect nationwide.
    Detroit may sell its art treasures
    Detroit may sell its art treasures

    Orr said that the city needs to cut debt to restore services and lower costs, such as taxes and insurance, that he says have chased businesses and residents out of the city.

    Detroit's population has fallen 28% since 2000. The unemployment rate, while down from a peak of 27.8% in the summer of 2009 -- when General Motors (GM, Fortune 500) and Chrysler Group were going through their own bankruptcies -- is still at 16.3%, nearly twice Michigan's statewide average.

    While the auto industry has enjoyed a resurgence with strong car sales and profits, most of the industry's Michigan plants lay outside of city limits.
    Not only does this suck for city workers, but I worry that it could set a precedent for cities (and maybe states) to follow suit.

 

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    Redwick, re-imagined RedWick's Avatar
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    Woo. Detroit.

    *noisemaker sound*
    Life... is like a grapefruit. It's orange and squishy, and has a few pips in it, and some folks have half a one for breakfast. - Douglas Adams

  • #3
    Quote Originally Posted by RedWick View Post
    Woo. Detroit.

    *noisemaker sound*


    Also: I can't wait for the asset sales! I'm gonna own twelve city blocks!
    Quote Originally Posted by nail bunny View Post
    I believe the hammer locking back is PWD's trigger warning.

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    consequences 3catcircus's Avatar
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    How soon until OCP deploys ED-209's?

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    Cockface! Turjan's Avatar
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    Quote Originally Posted by Bront View Post
    Linkie
    Not only does this suck for city workers, but I worry that it could set a precedent for cities (and maybe states) to follow suit.
    What precedent? There are already enough cities that filed bankruptcy. The biggest so far has been Stockton, which is somewhat less than half the size of Detroit.

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    %0 correct Scarbonac's Avatar
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    Quote Originally Posted by 3catcircus View Post
    How soon until OCP deploys ED-209's?
    Once they iron out one or two tiny glitches...

    Spoiler:
    "1 out of 3 Trump supporters is as stupid as the other 2"

  • #7
    Quote Originally Posted by Turjan View Post
    What precedent? There are already enough cities that filed bankruptcy. The biggest so far has been Stockton, which is somewhat less than half the size of Detroit.
    I believe this is the first case to cut pensions.
    Signatures are for losers.

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    Cockface! Turjan's Avatar
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    Quote Originally Posted by Justin Thyme View Post
    I believe this is the first case to cut pensions.
    Sure, but I heard the Stockton case is heading to court over this, as the creditors don't want to accept the exclusion of pensions.

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    diaglo's Avatar
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    so do we get to blame hobo, RedWick, or the Wynja clan for this one?
    FWIW, I'm on the design team and I pretty much find WoW as fun and interesting as banging my head against a brick wall.-- Mike Mearls

    I mean, I never GET any but that would be preferable. --Rel

  • #10
    Quote Originally Posted by diaglo View Post
    so do we get to blame hobo, RedWick, or the Wynja clan for this one?
    Bumped into Hobo the other day on Facebook, he was arguing some dumbfuck position but I can't recall on what topic. So yeah absolutely blame him.
    Quote Originally Posted by nail bunny View Post
    I believe the hammer locking back is PWD's trigger warning.

  • #11
    I was just over the river last weekend spending my coin in a couple Detroit establishments. So, I tried to help.

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    guyjin's Avatar
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    If you like it so much, why don't you buy it? http://www.reddit.com/r/canada/comme...d_buy_detroit/

  • #13
    Not a pony! GreyOne's Avatar
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    They should get the Detroit Red Wings organization to run the city. God knows they know how to run a good organization.

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    jowly Tabloid Believer's Avatar
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    In my area of the country, there are an inordinate amount of Michigan refugees. There are a particularly high number of people who are from the Detroit area. I know six personally.

    The stories these people tell me...holy shit, people. No wonder they moved. No wonder the city is bankrupt. Not only is crime rampant, but crime up there is particularly heinous. People will wait outside of nice restaurants, follow people home from the restaurant and then raid their house and rape everyone inside.

    Then, there's Mayor Kwame Kilpatrick - a figure so corrupt that his tenure as mayor sounds like a mob movie. He had wild stripper parties on the taxpayer dime. During one of the parties, his wife came in and assaulted one of the strippers. The stripper later wound up dead, the result of a professional hit. The detective on the case of the killed stripper was taken off of the case and transferred out of homicide.

    And the list goes on! You can't make this stuff up!
    "You think Osama is regretting giving his personal information on the Playstation Network?" - Remathilis

  • #15
    Redwick, re-imagined RedWick's Avatar
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    Quote Originally Posted by Tabloid Believer View Post
    And the list goes on! You can't make this stuff up!
    There are people in this city who would still vote for him. I'm not even joking, though I wish I was.
    Life... is like a grapefruit. It's orange and squishy, and has a few pips in it, and some folks have half a one for breakfast. - Douglas Adams

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