Detroit Bankruptcy Hearing Will Decide Speed of Municipal Eligibility TrialAugust 2, 2013 – In The News
Michael Sweet was quoted in the Huffington Post article "Detroit Bankruptcy Hearing Will Decide Speed of Municipal Eligibility Trial." While the full text can be found in the August 2, 2013, issue of Huffington Post, a synopsis is noted below.
Detroit has filed for bankruptcy, but that is only the first of many steps under Chapter 9 bankruptcy law. The city must meet numerous qualifications in order to prove that bankruptcy is the only available option.
Emergency Manager Kevyn Orr has stated he would like the city to exit bankruptcy proceedings by next fall, a timeline that could prove difficult to meet. San Bernardino, California, filed for bankruptcy last July and will not have their eligibility ruled on until August 28, 2013.
“These people have much more at stake in Detroit than they did in San Bernardino,” said Michael Sweet, a noted financial restructuring and bankruptcy attorney. “I think it’s a big stretch. It’s possible, but given what’s happening and given the fact that there are so many things to decide, I think it’s pretty optimistic to think it’s going to happen on a fast track.”
Creditors could argue that the city isn’t technically insolvent, that it has no intention of making a long-term plan for exiting bankruptcy, or that it failed to negotiate in good faith with labor unions and other parties. “I don’t think there will be any question over whether Detroit is insolvent,” Sweet noted. “The other two factors, though, could definitely get play.”