Detroit’s Chapter 9 Eligibility Case Nears Completion

: Chris Lee Law Firm

  Filed under: News

detroitDetroit’s Chapter 9 bankruptcy eligibility hearing is scheduled to hear its last arguments this Friday. After the bankruptcy judge in charge of the case hears the closing arguments, he will deliberate as to whether Detroit is in fact acting within its rights and in good faith in declaring Chapter 9 bankruptcy. If he decides the city is within its rights, the Chapter 9 case will proceed; if not, the case will be settled in another way.

Arguments Explained

The arguments against the validity of Detroit’s Chapter 9 claims are mainly the major creditors representing Detroit’s retired city workers and pensioners, who face the prospect of losing their pensions in a Chapter 9 proceeding. The argument claims that the city had not acted in good faith when negotiating with its creditors to try and obtain a settlement deal that would have avoided bankruptcy. The city offered terms that were obviously unacceptable and refused to negotiate with their creditors in a reasonable manner.

The advocates on behalf of the city deny these allegations, saying that they did in fact attempt to negotiate in good faith with the pensioners and the other creditors involved in the Chapter 9 case. Their argument simply states that they did do their best to negotiate and were unable to reach an agreement outside of Chapter 9 bankruptcy. The city’s arguments attempt to paint the creditors as inflexible and unwilling to compromise, while the arguments from the creditors are an attempt to paint city officials in that same light.

After the closing arguments, the bankruptcy judge presiding over the hearing will take as long as he needs to review the massive pile of testimony and documentation, and a result could be weeks in the making.

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