Judge Allows Residents to Address Court in Detroit Bankruptcy Case

A federal bankruptcy court spent almost four hours on Friday hearing from over 40 residents of Detroit about their concerns regarding the city’s plans to file for bankruptcy protection.

United States Bankruptcy Judge Steven Rhodes had originally granted time to over 100 individuals who had filed objections to Detroit’s bankruptcy plans.  Judge Rhodes had established a deadline by when any individuals who wanted to object to the bankruptcy could do so and he would allow them to speak in open court.

However, only between 40 and 50 individuals who had filed objections arrived in court at the time Judge Rhodes had allotted.  Regardless of the turnout, Judge Rhodes seemed pleased to see citizens taking a stand for what they believed.

“This was truly an extraordinary session of the court,” Judge Rhodes noted at the end of the hours-long session.  “It was an example of democracy at its very finest.”

Concerns Expressed About Lack of Democracy, Effect on Retirees and Their Families

Many of those who addressed Judge Rhodes did not agree with the democracy aspect regarding the bankruptcy filing itself.  Earlier this year, the state of Michigan passed legislation that allowed the state to put an emergency manager in place over the city.  That emergency manager rather than voters made the final decision for the city to declare bankruptcy in July.

“It seems like someone has hoodwinked us,” said Sylvester Davis, a retired city worker.  “They disallowed our elected representatives to represent us.”

Judge Rhodes indicated that he wanted the Detroit Emergency Manager Kevyn Orr and governor of Michigan Rick Snyder to listen to a recording of the testimony to be sure they heard the concerns of the people.

“I think democracy demands nothing less than they personally listen to what the citizens of this city said in this court today,” said Judge Rhodes.

Many others who addressed the court expressed concern about the effect the bankruptcy would have on their pensions.

“My fellow employees and I feel that we are entitled to a pension after working all this time,” said William Howard.  Mr. Howard indicated he had worked in Detroit’s Water and Sewage Department for almost 40 years and relied on his pension to live.

Many of those who spoke did so with emotion and at times through tears as they recounted the sacrifices they had made and the effect a loss in their pensions would have on their families.

“We worked on holidays, such as Christmas, New Years, and Thanksgiving, as others enjoyed their families, working to serve the citizens of Detroit and neighboring communities,” Howard continued.  “I pray that you, your honor, will object to this bankruptcy.”

Detroit Largest Ever Bankruptcy Filing by a City

The city filed for Chapter 9 bankruptcy protection in July, the largest ever bankruptcy filing by a municipality in the United States.  The city is seeking to restructure over $18 billion in debt.  Over half of that debt relates to pension and healthcare owed to city workers.

“The problems are immense and are technically, enormously complex,” noted Bruce Bennett, an attorney representing Detroit in the bankruptcy case.  “The entire team remembers that there’s a human dimension in all of this.”

Judge Rhodes is expected to begin hearing formal arguments for and against the bankruptcy filing in October to determine whether Detroit is eligible to seek bankruptcy protection.

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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.