Detroit’s emergency manager sure loves the media

By Cate Long
August 9, 2013

#Detroit EM Orr was one of Miami's "most eligible men" in 1990, thank you @MaryellenTighe for the best fact of the day! #muniland

— Kate Smith (@laKateKate) August 8, 2013

I’ve closely watched five municipal bankruptcies, Jefferson County, Alabama, Central Falls, Rhode Island, Vallejo, Stockton and San Bernardino in California and two near bankruptcies in Mammoth Lakes, California and Harrisburg, Pennsylvania. Never have I seen the person managing a bankruptcy process seek media attention like Detroit’s Emergency Manager Kevyn Orr.

You can watch video interviews of Orr done with Detroit television stations and newspapers, national broadcast networks and national financial media like Reuters, the Wall Street Journal and the Financial Times. This media rush began before Orr dropped his Proposal to Creditors on June 14th. I was astonished at the time that Orr had pre-packaged and distributed how he wanted creditors treated. This step usually happens much later in a bankruptcy process. Although Orr claimed that he wanted to use his proposal as a template for negotiations with creditors he held no meetings with retirees, unions or bondholders other than marching these groups into city auditoriums and presenting Powerpoint presentations. Everyone of these groups say that Orr did not hold “good faith” negotiations; a requirement to be accepted into Chapter 9 bankruptcy.

Orr really amped up media attention with his invitation for bondholders to take a bus tour of Detroit:

Of course bondholders declined to go on the bus tour when Orr promised to take them to the most violent parts of Detroit accompanied by armed guards. The Detroit News tells the story (emphasis mine):

About 40 bondholders, insurers and other unsecured creditors, mostly from New York City and New Jersey, are invited and will have to sign a waiver indemnifying the city if anyone is injured or killed during the roughly four-hour tour, Orr’s spokesman Bill Nowling said. About 15 people have signed up so far and armed escorts are likely.

The theatrics of Orr’s bus tour, ultimately cancelled, will likely never be matched in any municipal bankruptcy. The idea that bondholders needed to take a bond haircut or possibly get left in a violent neighborhood certainly set a unique muniland precedent.

But it is with the issue of the Detroit Institute of Art collection that Orr has whipped the public into a national frenzy. When Orr first brought up the possible need to sell some of the assets of the DIA in May he quickly hedged by saying that creditors, facing haircuts, would demand the sale of the Picasso’s and Van Goghs. When criticism rained down from national art and museum professionals and the general public Orr reversed course and said the DIA assets needed only to be valued as all assets of the city and to be on the balance sheet.

Last week Orr hired Christie’s at a cost of $200,000 to come in and inventory and value DIA’s art. He repeated at the time that it was only for balance sheet purposes. But last night he abruptly changed course and in an interview with Reuters said that some of the DIA’s art could be sold. Several hours earlier Michigan’s governor Rick Snyder was quoted as saying that there was no plan to sell any of the DIA’s holdings. An observer could get whipsaw trying to follow the issue.

The only other bankruptcy receiver whose public role comes within miles of Kevyn Orr was David Unkovic the first appointed receiver of Harrisburg, Pennsylvania. Unkovic, a long time municipal bond attorney, spent a lot of time in the community listening to the residents of Harrisburg and was eventually dismissed by Pennsylvania governor Tom Corbett as he began to name names of politicians that had been involved in the corrupt practices that brought Harrisburg to its knees fiscally. Unkovic was a zealot for the public weal in a way that Orr will never be.

The other problem with so much media exposure for Orr is that he has begun to say arrogant things about the city he is representing. See this local news video, which cites Orr calling Detroit a city that was “dumb, lazy, happy and rich.”

When you look over Orr’s use of the media you see something that has never happened in a municipal bankruptcy. Even Ken Klee, the bankruptcy attorney for Jefferson County, Alabama and arguably the most prominent municipal bankruptcy attorney in America, is rarely in the press unless commenting on court rulings. Orr is charting a new course.

5 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

I for one am very happy that Detroit get all the media attention it can. It is the first of a systemic problem that America needs to be aware of. It’s hard to get Joe & Jose sis pack to pay attention.

Posted by tmc | Report as abusive

I deal with the public sector benefit system, and there is nothing false about what Kevyn Orr said, actually worse…Nepotism, double-dipping salaries and pensions, taxpayer funded benefit packages most Americans can only dream of…But Orr should stick to scripted talking points, or he becomes the story, not Detroit.

Posted by Rasputin101 | Report as abusive

Wow, the clarity!

Posted by ARJTurgot2 | Report as abusive

Kevyn Orr’s high public profile is the only real weapon he has to keep hundreds, maybe thousands, of opportunists from derailing the bankruptcy process. You would have to have lived in Detroit over the past 10 years to understand just how many malefactors here are determined to use any means possible to keep feeding on Detroit’s corpse.

Posted by 10x25mm | Report as abusive

Probably getting ready to campaign for political office.

Posted by AZreb | Report as abusive