Detroit mayor works to get financial turnaround firms in place
Updated On: Nov 28 2012 07:11:12 PM EST
Local 4 has learned the Detroit mayor's office has set the wheels in motion to get restructuring firms in place as the city faces a financial crisis.
Two weeks ago, the city of Detroit put out eight requests for proposals, or RFPs. Of that group of eight, the turnaround teams are down to two. Yet, Mayor Dave Bing's office is still asking a lot of questions. Nothing is set in stone.
Sources close to the situation say Conway MacKenzie, a Bloomfield Hills-base financial turnaround firm, and Ernst and Young, the nationally-known accounting firm, made the cut.
Plunkett Conney bankruptcy attorney and financial expert Doug Bernstein said it's about time.
"It's really realizing that there's a problem and taking steps to address them, come in with a fresh approach -- no preconceived ideas," he said.
In the standard turnaround the planning process starts with forecasting Detroit's population over the next three to five years to figure out the city's true income so it can begin to budget accordingly.
That gives the city numbers to work with in an attempt to get union negotiations going to see if they can get concessions that would balance the books.
A turnaround plan, which may or may not stave off Chapter 9 bankruptcy, usually arises from that work.
The decision whether Chapter 9 is necessary would take three to six months.
"I don't know that it's inevitable and you can't tell where the money is going to come from to keep the city afloat for three to six months," said Bernstein.
That is up to Michigan's governor and treasurer. Meanwhile, Bing's office is still working on the finer points of this plan. However, it is expected to brought to City Council during a special session Dec. 11.
There is no way of knowing whether it will pass.
The state of Michigan is willing to pay up to 50 percent of the turnaround firm bill.