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Published: Monday, 8/19/2013

More than 100 file objectionsin Detroit bankruptcy case

Retirees, local unions among those meeting deadline

ASSOCIATED PRESS
Mike Zielinksi, left, leads protesters during a rally outside the federal courthouse in Detroit. Deadline day arrived Monday for creditors to oppose Detroit’s request for bankruptcy protection. Mike Zielinksi, left, leads protesters during a rally outside the federal courthouse in Detroit. Deadline day arrived Monday for creditors to oppose Detroit’s request for bankruptcy protection.
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DETROIT — The city’s biggest employee union, retirees, and even a few dozen residents filed objections Monday to Detroit’s request for bankruptcy protection, the largest municipal filing in U.S. history and a move aimed at wiping away billions of dollars in debt.

The filing by the American Federation of State, County & Municipal Employees Michigan Council 25 also came before expected objections from two city pension systems, bond holders, banks, and others who hope to convince federal Judge Steven Rhodes not to allow the Chapter 9 petition by Detroit emergency manager Kevyn Orr.

Judge Rhodes set Monday as the objection eligibility deadline.

Attorneys for large creditors had until 11:59 p.m. to file objections electronically. Individual creditors who fear losing their pensions and paying more for health care began filing objections Monday in person at the court.

By early Monday evening, more than 100 objections had been filed, including those made by several smaller city unions.

Since 1954, 29 of 62 municipal bankruptcies pursued in the United States have been dismissed.

The AFSCME, the AFL-CIO, and city retirees claim in their objection that Michigan’s emergency manager law — which gives Mr. Orr his authority — impairs vested pension rights violating the state Constitution.

They also claim that Mr. Orr did not negotiate in good faith with city creditors and that he has not yet proved Detroit is insolvent.

“The city, led by its unelected, politically appointed emergency manager ... hastily commenced this unconstitutional, unlawfully authorized Chapter 9 proceeding seeking the haven of bankruptcy to illegally attempt to slash pension and other post-employment benefit obligations and cram such reductions down the throats of current and former city employees such as the AFSCME Detroit Employees,” read their objection.

Mr. Orr, hired in March by the state to fix Detroit’s finances, has said there are no other options for Detroit. The city’s budget deficit has hovered near or above $300 million during the past few years.

He filed for bankruptcy on July 18, claiming the city has at least $18 billion in liabilities, from underfunded pensions and health-care costs to bonds that lack city revenue to be paid off.

Mr. Orr also stopped payment on $2.5 billion in debt in June.

Michigan Attorney General Bill Schuette, who earlier joined the battle on behalf of city pensioners, wrote in a 20-page statement filed Monday in federal court that constitutional protections cannot be stepped on.

Detroit has about 21,000 retired workers who are owed benefits, with underfunded obligations of $3.5 billion for pensions and $5.7 billion for retiree health coverage.



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