Detroit Will Need to Prove it is Financially InsolventJuly 19, 2013 – In The News
Michael Sweet was quoted in the Detroit News article "Detroit Will Need to prove it is Financially Insolvent." While the full text can be found in the July 18, 2013, issue of Detroit News, a synopsis is noted below.
Detroit will need to first establish eligibility for bankruptcy before it can begin trying to shed its debt and liabilities. The city must first prove it is financially insolvent, desires to restructure debt and that it attempted to negotiate in good faith with creditors, according to Michael Sweet.
“I would be surprised if anyone wants to make an argument that Detroit is not insolvent,” said Sweet.
Sweet noted there is no timetable for how long it could take for a judge to determine Detroit’s eligibility, citing the case of San Bernardino, California, which filed for bankruptcy almost a year ago and will not have its eligibility determined until next month.
Unlike a Chapter 11 bankruptcy for corporations, counter proposals cannot be made by creditors and the judge cannot replace the city’s emergency manager or restructuring team in this case. “All that can happen is Orr can propose a plan and the court can deem it unacceptable,” said Sweet. “And Orr can propose another plan. The only recourse is to dismiss the case or approve a plan.”