July 20, 2013

Insolvent Detroit faces hard choices

Everybody has questions as they await the outcome of the city's recent bankruptcy filing.

By COREY WILLIAMS The Associated Press

(Continued from page 1)

A vacant and blighted home in Detroit
click image to enlarge

A vacant and blighted home sits alone in an east side neighborhood once full of homes in Detroit on Jan. 27. The story of Detroit’s decline is decades old: Its tax revenue and population have shrunk and labor costs have remained high.

Reuters

JUDGE RULES AGAINST BANKRUPTCY PETITION

A judge is ordering Michigan Gov. Rick Snyder to withdraw Detroit's bankruptcy petition, saying the state is illegally trampling the rights of pensioners.

However, the decision is unlikely to have any effect on the bankruptcy. That's because once a bankruptcy filing is made, it generally trumps other litigation in state courts.

Ingham County Judge Rosemarie Aquilina's decision Friday came in a lawsuit filed by Detroit pensioners. The judge had planned an emergency hearing Thursday, but Detroit then filed for bankruptcy protection.

The judge says plaintiffs in the case were "blindsided."

The attorney general's office says it will take Aquilina's order to the state appeals court.

-- The Associated Press

Buried in the hundreds of pages of bankruptcy documents is the name Hercules & Hercules, Inc. For more than two decades, the janitorial supply company has done business with the city, but on occasion, Detroit couldn't pay and the company allowed it to forego payments. For Belinda Jefferson, president of the family-run firm, the bankruptcy doesn't change its commitment.

"We know the city is facing challenges and we're going to stick by them," said Jefferson.

The company is one of more 7,000 vendors listed among the 100,000 creditors documented in the bankruptcy filing. Those with debt tied to revenue streams like water and sewerage fees will get paid. Unsecured debt holders like Hercules & Hercules will have to stand in line and see what remains if a judge gives Detroit the OK to proceed with bankruptcy.

"We will treat everyone in the unsecured class equally because that's what's required under the law," Orr said. "How that breaks out is a function of the math."

RETIREE ANXIETY

The phones are lighting up at the offices of the Retired Detroit Police & Fire Fighters Association.

"The thing we can tell them right now is: 'Nothing's happened yet. Our pension hopefully will be there on Aug. 1 when it comes in,"' said the group's vice president, Greg Trozak.

Detroit has about 10,000 workers and 18,000 retirees, and Snyder called the amount of money Detroit spends on health care and pensions "unsustainable."

For retirees like Trozak, city-funded health care may become a thing of the past.

"How can we make sure there are alternative health care programs?" Snyder said. "There is basically zero funding that has been set aside for the health care liabilities in the city of Detroit."

PUBLIC SAFETY

Rosalind Childs called 911 last year after her teenage son came home to find their home had been burglarized. The thieves took off with a laptop computer, money and a designer handbag.

"I got home four hours later and he was sitting there with a butcher's knife in my house waiting for the police to come," Childs said of her son.

After two more calls, the 51-year-old Childs was told she would be better off making a report at the closest precinct.

Childs is doubtful bankruptcy will change anything.

"We already are getting poor city services. Last week, they didn't even pick up our trash," she said. "I don't think bankruptcy is really going to make a difference. You can't put a band aid on a gunshot wound."

 

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