Detroit Files for BankruptcyJuly 24, 2013 – In The News
Michael Sweet was a guest on CNBC on July 24, 2013, to discuss the Detroit bankruptcy filing and give insight to the intricacies of the case.
On the bankruptcy filing, Sweet noted, “Whenever somebody files bankruptcy, there's an automatic stay against that debtor, and the reason for that is to stop any state court collection proceeding and let the bankruptcy proceeding commence. This is a fundamental part of the U.S. bankruptcy law. What we're seeing right now is the first scuffle in this case, and it's come about because five minutes before a state court judge in Lansing was to take the bench and issue an injunction against the city of Detroit filing bankruptcy, the city filed for bankruptcy.”
“What is happening here is that there is a very, very specific argument being made about whether or not the emergency manager and then the governor should be granted the same protections of that automatic stay that would extend to the city of Detroit,” Sweet said.
Noting he believed this would result in a win for Detroit in its push to continue its bankruptcy filing, Sweet said. “However, nothing the judge says could prevent anyone who is litigating with the state or with the governor to come into the bankruptcy court and bring the same action. All this says is you can't do it in state court right now.”
”What the judge has said is that he will overrule both objections, and now he's going through his reasoning for doing so. It does sound like what he's going to do is confirm that the stay applies, that it extends to the other officers and that nothing is going to be slowed down in his court by what would have been happening in state court.”
To view the complete interview click here.