What Will Happen if Detroit Bankruptcy is Rejected? Predictions are Grim

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“Everyone is getting paid: employees, vendors, health care etc.,” said Bill Nowling, Orr’s spokesman. “Right now, we are paying 98 percent of our vendors within 30 days, and that hasn’t happened in decades.”

Anthony Davis, owner of AC Towing, said payments started popping up about two weeks ago.

“They sent like a thousand, then $800 and then another thousand,” he said.

Detroit entered bankruptcy with about 9,400 employees, a winnowing process that took years and cut the workforce by 30 percent. Consultants testified that the checkbook was down to just $7 million last spring, pocket change in a $1 billion budget.

New Police Chief James Craig said average response time to calls for assistance has improved to 11 minutes, compared to 50 minutes or longer earlier this year. New streetlights slowly are replacing tens of thousands of broken ones in a city with more square miles of land than Boston, Manhattan and San Francisco combined.

“It’s a big difference,” said Walker, 51, who feels the new lights make his neighborhood more secure. “People get away with things in the dark.”

Ed McNeil, special assistant to the president of the American Federation of State, County & Municipal Employees Council 25, downplays the urgency expressed by Orr’s team.

“Eighteen billion dollars — that’s down the road. You’re not talking about money due today,” McNeil said.

The history of recent public bankruptcies shows most filing for it have cleared the eligibility stage, including Jefferson County, Ala., Stockton, Calif., and San Bernardino, Calif. A handful of others were dismissed but not for reasons that are in play in Detroit.

Rhodes hasn’t signaled which way he’s leaning on Detroit’s eligibility. But he referred to possible benefits in a recent order suspending a lawsuit that challenged Orr’s status as emergency manager.

“The public … has an interest in the opportunity that this bankruptcy case may provide for the city of Detroit, not only to adjust its debt and to restore the basic services that its residents need for their health and safety but also to regenerate its economic livelihood,” the judge said.

(Photo: AP)

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