Detroit Bankruptcy: Restructuring $18 Billion of Debt Will Be Long and Challenging…

[Link: Harvey Miller: Detroit Will Be In Bankruptcy “For A Long Time” – Bloomberg Law]

It’s on. Last week, a federal judge gave the city of Detroit the go-ahead to proceed with its $18 billion bankruptcy case.

An important step, but just the first of many in what promises to be a lengthy process sorting through the rights and needs of those who hold secured debt, unsecured creditors – including the city’s 21,000 pensioners – and taxpayers. As bankruptcy attorney Harvey Miller puts it in the above video: “it’s going to be a long case.”

For your reference, here’s an early roundup of legal analysis and commentary on the country’s largest ever Chapter 9 municipal bankruptcy filing:

The City of Detroit Files for Chapter 9 Bankruptcy Protection (Orrick):

“On July 18, the City of Detroit filed for protection under chapter 9 of the Bankruptcy Code, making Detroit the largest municipality to file for chapter 9 relief in United States history. Detroit is seeking to restructure approximately $18 billion in accrued obligations, consisting of approximately $11.9 billion in unsecured obligations and $6.4 billion in secured obligations.” Read on>>

Court Approves Extension of the Automatic Stay in Detroit’s Chapter 9 Case to State Officials (Cadwalader):

“Prior to the commencement of the City’s chapter 9 case, certain unions, retirees and current employees of the City (collectively, the ‘Litigants’) commenced multiple lawsuits against the Emergency Manager, the Governor, and the State Treasurer in state court regarding the constitutionality of the City’s chapter 9 petition.” Read on>>

Motor City Cruises Into Bankruptcy (Buchalter Nemer):

“Chapter 9 will provide Detroit with tremendous opportunity to restructure its financial affairs. In general, a municipality has far greater flexibility to effectuate the adjustment of its debts compared to typical business reorganizations under chapter 11. This is primarily due to the tension between state sovereignty and Congress’ authorization to provide for uniform bankruptcy laws.” Read on>>

Detroit Bankruptcy Likely To Rob Retirees of Pension Benefits (Lawyers.com):

“The bankruptcy of Detroit could have devastating consequences for thousands of retired city workers who depend on their pensions for food and shelter. After years of speculation the city filed last week under the rarely-used Chapter 9 of the federal bankruptcy code governing municipal insolvency. The city owes $18.5 billion in debt, of which $3.5 billion is an unfunded pension liability.” Read on>>

Also read:

Find additional updates on the Detroit Bankruptcy at JD Supra Law News>>