The finish line for the complicated Detroit Chapter 9 may just be in sight, as the judge presiding over the largest municipal bankruptcy in US history has targeted the first full week of November for a ruling on the city’s exit plan.
Bankruptcy Judge Steven Rhodes said testimony and arguments will wrap next week in the city’s complicated bankruptcy case, barring an extreme situation. Granted, Rhodes had vowed early this year to move the case rapidly and have it wrapped by summer, but the complexity of the case as well as a mountain of objections and court actions from creditors trying to maximize returns and unions trying to preserve pension and health care benefits rendered the accelerated timetable impossible. It shouldn’t be a surprise, as expert attorneys like Lowenstein & Sandler LLP’s Bruce Nathan have long described the Chapter 9 process as one with high potential for delays and complications not seen even trickier Chapter 11 cases.
The outcome of the Detroit case remains under close watch nationally because of its potential implications for many US cities struggling with escalating debt problems tied primarily to retiree benefits such as pensions and health insurance, which is among the core issues in play in the Motor City.
- Brian Shappell, CBA, CICP, NACM staff writer