U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday that Detroit is eligible to file for Chapter Nine bankruptcy protection and its filing was proper. That means Kevyn Orr, Detroit's emergency manager, can move forward with a radical restructuring plan for the city's finance that will be subject to Rhodes' approval. Here are a few reactions to the historic ruling in largest municipal bankruptcy case in U.S. history.
Kevyn Orr:
“We are making good progress. In addition to today’s important decision, Detroit has transferred its electric operations and customers to DTE Energy and begun a program to improve City lighting. It has announced plans to privatize trash collection that will save $6 million a year while improving services and adding curbside recycling. It has invested in sorely needed equipment for its police, fire and other first responders. The City also has arranged, pending a court hearing later this month, $350 million of post-petition financing to improve its financial condition, lessen some of its debt obligations, and make much-needed investments. The City is also committed to the federal mediation already underway aimed at resolving disputes with its creditors and we fully support U.S. District Court Chief Judge Gerald Rosen’s efforts to find additive solutions, particularly from the philanthropic community, to the City’s financial issues."
Detroit's General Retirement System and the Police and Fire Retirement System:
“The State Constitution represents the people’s will. That will cannot be ignored or subverted because it’s financially convenient to do so, or because slashing pensions allows for a city to escape from its constitutionally protected pension benefit obligations.
“We submit that the Pensions Clause requires that the Court has two options. The first option is that it follows the earlier State Court ruling and finds the Emergency Manager Act -- or Public Act 436 – unconstitutional, which means the City can’t be a debtor under Chapter 9 under these circumstances. The second option is that it determines that the law is limited by the Pensions Clause of the Michigan Constitution, which requires that as the City works through bankruptcy its pension obligations will be fully respected and upheld."
Detroit Regional Chamber President and CEO Sandy Baruah:
“I am not surprised, but relieved, of Judge Rhodes' decision today. This now clears the way not only for the bankruptcy proceeding, but also the critical process of reforming city government structures and processes. Bankruptcy is not the ultimate goal. Bankruptcy is a tool to reform and restructure government service delivery in a cost-effective manner that works for the citizens and businesses of Detroit." --
Democratic gubernatorial candidate Mark Shauer:
“It’s time to rebuild the great city of Detroit. How we got here isn’t as important as how we build a better future for Detroit’s families, businesses, and neighborhoods. As the bankruptcy restructuring plan advances, Gov. Snyder and Kevyn Orr have a responsibility to uphold Michigan’s constitution by protecting hard-earned retiree pensions over Wall Street creditors. Moreover, I would strongly urge Gov. Snyder to empower Mayor-Elect Duggan to lead the city’s day-to-day turnaround efforts. It’s time for Detroiters to lead Detroit.”
Detroit Free Press editorial board:
"U.S. Bankruptcy Judge Steven Rhodes’ ruling today is a victory for Detroiters, who have suffered too long under dysfunctional leadership, a constriction of services that is literally life-threatening, and a municipal landscape ravaged by blight and damaged, crumbling infrastructure."
"What the judge confirmed today is that Detroit is broke. It can’t continue operating without radical change. That means Detroit must change the way it operates, embrace different approaches to delivering services and commit itself to fiscal responsibility in the future.
"Rhodes rightly noted that had Detroit matched spending to revenue long ago and not borrowed to pay its monthly bills, its debt load today would be a manageable $700 million, instead of a crushing $18 billion. It can’t return to those bad habits."
