After Opening Gambit, Detroit Manager’s Next Move Vexes CreditorsJune 16, 2013 – In The News
Michael Sweet was quoted in the Reuters article "Detroit on the Brink: What’s the City’s Next Move." While the full text can be found in the June 17, 2013, issue of Reuters, a synopsis is noted below.
Kevyn Orr, Detroit’s emergency manager, has laid out a road for the city that could include a bankruptcy filing, leaving bondholders, pension managers and others to assess his next steps, while seeking to minimize losses. Orr must either coerce the city’s creditors into cutting a deal that would leave many with just pennies on the dollar, or file for Chapter 9 bankruptcy.
“Kevyn Orr is a bankruptcy lawyer and he’s going down a checklist of the things he needs to do,” said Michael Sweet. “He’s keeping all the options on the table.”
Michigan also has a clause in its constitution to protect pensions and retirement benefits, making it unclear how that provision would be treated in federal bankruptcy.
Sweet said a judge would have to “determine whether the 10th Amendment (of the U.S. Constitution) trumps the notion that federal law is supreme.”
“The last thing (union pension funds) may want is for a judge to rule on that,” Sweet said. “Because if the judge ruled against them, it would open the floodgates.”
This article was also featured on Fox Business under the title "Detroit on the Brink: What’s the City’s Next Move."