Stockton bankruptcy judge: “Straighten me out before I make some dramatic boneheaded mistake” on pensions. http://t.co/6blAtgbNYu
The technocratic governor of Michigan, Rick Snyder, and the emergency manager he appointed to restructure Detroit, Kevyn Orr, spoke at an event sponsored by the Manhattan Institute for Policy Research this week. Their relentless positivity contrasted with the creditor mess they had left behind in Detroit.
A showdown between bond insurers and city attorneys in Detroit’s bankruptcy highlights the level of protection that secured bondholders have in Chapter 9 bankruptcy. Detroit attorneys argued that federal bankruptcy law trumps Michigan state law and that “secured” bonds could be impaired. From Chad Livengood of the Detroit News:
Swaps ruling winners: Retirees, residents, pension funds, bondholders. Losers: Kevyn Orr, Jones Day, Gerald Rosen, UBS, Bank of America.
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:
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:
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: