Taking Stock: Detroit Files for BankruptcyJuly 19, 2013 – In The News
Michael Sweet was a featured guest on Bloomberg TV to discuss the recent bankruptcy filing by the city of Detroit. While the interview can be found in the July 19, 2013, episode of Bloomberg TV, a synopsis is noted below.
A Michigan judge declared the bankruptcy petition filed by Detroit violates the state’s constitution and ordered it withdrawn. Asked whether that can really happen, Michael Sweet, a noted authority on financial restructuring and bankruptcy, said, “A Michigan judge is free to do what she wants. However, I think the governor’s response was that he wasn’t going to do it. Certainly Kevyn Orr, the emergency manager, who filed the petition, isn’t going to do it. It is a fight that will play itself out in both the state court and bankruptcy court. Ultimately I think we’ll see if the federal law prevails. The case is in bankruptcy court. They beat them to the punch by filing yesterday afternoon about five minutes before she was supposed to hold the hearing. This will just be the next chapter in that discussion.”
Asked what is going on with the various negotiating partners, Sweet said, “This is a really tough negotiation to have. The numbers are just extraordinary. We are talking about $18 billion in debt that needs to be addressed, and the city just doesn’t have the kind of revenue to match up with that. They need to figure out a way to live within their means. They need to find a way to take the revenue they have and match it to the obligations they have. This includes, in addition to paying off debt, keeping the city going for the health, safety and welfare of the residents and hopefully moving the city forward to reinvent itself in the 21st century. That’s a heavy lift for Kevyn Orr or anyone else to do. These negotiations will be tough, but it’s an important discussion to have because things cannot continue to go the way they have been going for Detroit.”