Detroit bankruptcy: Where things stand

Published On: Jul 22 2013 05:43:36 PM EDT   Updated On: Jul 22 2013 05:53:39 PM EDT

First court date now set for Detroit Chapter 9 filing.


Detroit is taking the next step in bankruptcy filing with the first court date now set.

The court dates comes even as some call the bankruptcy unconstitutional.

Emergency manager Keyvn Orr has been granted an expedited bankruptcy hearing in spite of objections filed today by Detroit's two pension boards.  

Douglas Bernstein is a bankruptcy lawyer for Plunkett Cooney; he is not connected with the Detroit case, but says Wednesday's hearing will take up the issue of whether Orr and Gov. Snyder will be treated as city officials.

City officials are normally shielded from lawsuits during Chapter 9 proceedings.

"The theory being if that if they are spending all their time defending lawsuits they can't attend to the matters at hand which is fixing city finances," said Bernstein.

Meanwhile, unions are trying to block the bankruptcy in Ingham County Circuit Court.

Read: Judge rules Detroit bankruptcy filing is unconstitutional

The union claims Snyder is violating the state constitution, which guarantees public employee pensions. 

The judge delayed a hearing while the issue is fought in the appeals court.

The first bankruptcy hearing will be Wednesday and the courthouse will need one large courtroom and two overflow rooms.  Creditors are being limited to two lawyers per firm.

"The limitation on number of bodies really is for management. It's not unusual for some larger firms to send four, five or six lawyers to the hearings which are why the proceedings are that expensive," said Bernstein.


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