Constitutional, Good Faith Arguments Unlikely to Halt Detroit Bankruptcy

August 20, 2013 – In The News

Michael Sweet was quoted in the Reuters article "Constitutional, Good Faith Arguments Unlikely to Halt Detroit Bankruptcy." While the full text can be found in the August 20, 2013, issue of Reuters, a synopsis is noted below.

The key to eligibility for Chapter 9 bankruptcy for Detroit lies in proving the city is insolvent and has negotiated with creditors in good faith.

In filings Monday, unions representing workers focused on whether the emergency manager Kevyn Orr negotiated in good faith. The bulk of the arguments however, boiled down to whether the bankruptcy filing violates the state constitution.

According to noted bankruptcy attorney Michael Sweet, the argument over Michigan’s constitution could well fall outside the key considerations of the judge in the eligibility hearing.

“I think he is going to view this quite narrowly in terms of eligibility,” Sweet said. “The question of constitutionality is something that will happen in the future. It is not something in front of the judge right now.”

“If Judge Rhodes ultimately decides that Detroit is eligible, I am confident he will do so noting that he has not ruled out a subsequent ruling on the issue of constitutionality,” said Sweet. “There will almost certainly be a ruling at some point because this is a very important issue.”