Detroit proposes bankruptcy plan by Dec. 31

8/2/2013

DETROIT  — Detroit says it wants to submit a plan to emerge from bankruptcy by year’s end, an aggressive timeframe two months earlier than a judge has proposed.

Attorney David Heiman told a judge today that “time is our enemy” and Detroit’s distressed finances “are not going to change.” Nonetheless, there are many hurdles still to overcome.

U.S. Bankruptcy Judge Steven Rhodes has to determine whether Detroit is eligible for bankruptcy. Creditors will have an opportunity to argue that the city hasn’t negotiated in good faith. There’s another issue: Michigan’s constitution bars breaking public pensions, which are a key part of the city’s liabilities.

A trial on the eligibility question has been proposed for late October. Detroit filed for Chapter 9 protection two weeks ago, citing debts of at least $18 billion.