Reuters blog archive
By Richard Beales and Kevin Allison
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
Christie’s says artworks owned by bankrupt Detroit could fetch up to $866 million. But there’s no need to stop there. With 78,000 abandoned buildings and a Banksy tag potentially worth $1 million or more, graffiti could help save the day.
Motor City needs to raise funds where it can, as well as slashing its obligations, if it’s to emerge sustainably from bankruptcy. It’s a controversial idea to sell civic art to fix a financial problem, but it shouldn’t be ruled out – especially when fewer than 3,000 of the items in the 66,000-strong Detroit Institute of Art collection are at issue, at least in the auction house’s initial appraisal.
The top end of the Christie’s estimate amounts to nearly 10 percent of the city’s $11.5 billion of unsecured obligations, as defined by Kevyn Orr, the city’s emergency manager. That’s enough to make a difference, whether to the city’s pensioners or to other creditors. Yet Detroit could try additional creative fundraising ideas.
Fitch Ratings managing director Amy Laskey talked to Fox Business about how Detroit is a unique story in muniland. Fitch published a research note on the bankruptcy ruling and concluded that Detroit’s ruling would not lead to a “spate” of local bankruptcies in Michigan:
Although the judge ruled that pensions could be adjusted, Fitch does not believe the ruling grants Detroit's emergency manager unlimited freedom to adjust these obligations. The city must submit a plan of adjustment to the bankruptcy court, which must be deemed 'fair and equitable' by the presiding judge. The emergency manager expects to submit the plan to the court by year-end. Fitch does not believe that the judge's decision on pensions will lead to a spate of additional bankruptcy filings in Michigan.
By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
It’s the start of a new era for Detroit – and perhaps other American metropolises in wobbly financial condition. A federal bankruptcy judge ruled on Tuesday that Motown, suffocating under about $18.5 billion in debt, was eligible to file for protection from creditors. If the decision withstands appeal, it would confirm bankruptcy as a credible option for even the biggest U.S. cities. It could also give other municipalities the needed kick to get their houses in order.
Detroit was ruled eligible for Chapter 9 bankruptcy protection on Tuesday. Twitter coverage of the federal eligibility hearing tracked the history. Here are the highlights:
Court is in session; Judge Rhodes asks all attorneys in court to introduce themselves for the record.
Tweets from the final day in the federal trial to determine if Detroit is eligible for Chapter 9 bankruptcy protection:
Good morning from Detroit bankruptcy court where lawyers will start closing arguments in the eligibility trial at 9 a.m.
It was the last day of testimony in Detroit’s bankruptcy eligibility hearing. Here are some tweets leading up to the closing arguments on Friday:
Snyder aide Rich Baird is likely to testify this afternoon, but former Michigan Treasurer Andy Dillon is on the stand at 9 a.m.
It is a real hand-to-hand fight in Detroit as creditors seek to establish that emergency manager Kevyn Orr did not conduct “good faith” negotiations prior to filing Chapter 9 bankruptcy for the city. It’s surprising that the city is not arguing that there were too many creditors to negotiate. The bankruptcy code allows a debtor to use this provision to escape conducting negotiations. Here are tweets from Tuesday:
It's 9 a.m. exactly and Rhodes is on the bench. We're underway in Day 7 of the Detroit bankruptcy trial.
The sixth day of Detroit’s bankruptcy eligibility hearing was about whether the city negotiated in good faith with creditors. Detroit's emergency manager Kevyn Orr (@MotownEM) returned to the stand to continue his testimony. Orr was appointed emergency manager on March 14, 2013. Here is the coverage from journalists and others on Twitter:
Kevyn Orr will continue his testimony this morning. This will be his fourth day on the witness stand.
On Tuesday Detroit’s emergency manager Kevyn Orr returned to the witness stand to be grilled by creditor attorneys. This is likely to be some of the most important testimony of the eligibility trial.
Creditor attorneys have a lengthy list union & retiree reps to call to testify, likely about pre-bankruptcy negotiations. #Detroit
In day four of Detroit’s bankruptcy eligibility hearing some big issues with both state and federal ramifications were addressed. It was the first time in American history that a sitting governor was called to testify in a Chapter 9 municipal bankruptcy case.
The twitter handle for Michigan Governor Rick Snyder is @onetoughnerd. Detroit’s Emergency Manager, Kevyn Orr’s twitter handle is @motownem.