Creditors file objections to Detroit bankruptcy

In July, Kevyn Orr, state-appointed emergency manager, right, with Michigan Gov. Rick Snyder, asked for bankruptcy protection. Unions, creditors, and retirees were expected to file formal objections to Detroit’s eligibility before today’s deadline.

DETROIT — Deadline day arrived today for creditors to oppose Detroit’s request for bankruptcy protection, the largest municipal filing in U.S. history and one aimed at digging the beleaguered city out of billions of dollars in debt.

Judge Steven Rhodes set today as the eligibility objection deadline in the bankruptcy petition by Detroit emergency manager Kevyn Orr.

Creditors — including bond holders, insurers, banks, employee pension funds, individuals and companies that provided services — have until just before midnight to file objections electronically.

A group of about 30 city residents arrived outside the court building early today to file individual objections to the bankruptcy request.

“Hopefully, we’ll have the opportunity to argue why Detroit should not be allowed to go into bankruptcy,” said the Rev. Charles Williams II, Michigan chapter president of the National Action Network, a grassroots organization that opposes the state’s emergency law.

Williams told reporters outside federal court before the group went inside to file objections that the forms arrived last week to the homes of some of the group’s members. About 40 objections had been filed by early afternoon.

The group is being advised by a former corporation counsel for the city.

“The emergency manager made no reference to this,” Williams said of the forms being mailed to city residents. “Two or three business days to file a legal objection is not fair to the people of Detroit.”

The Associated Press left a message today with Orr’s office to determine if the forms the group said they received last week were authorized by Orr or are part of the process allowing creditors to file objections.

The deadline is just one of several steps that could lead to federal Judge Steven Rhodes allowing Detroit into bankruptcy protection while it restructures.

Orr filed for bankruptcy on July 18. He claims 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.

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

The city has until Sept. 6 to file its responses to any objections by creditors. A multi-day hearing on the eligibility question is scheduled to start Oct. 23.

Detroit residents, so far, have been left out of the bankruptcy process, said Randy Heard, a 52-year-old unemployed gas utility worker.

Heard, a National Action Network member, also expected to file paperwork today objecting to Orr’s bankruptcy petition.

“We don’t have a voice. They didn’t give us a chance to speak,” Heard said. “Our (elected) leaders said we don’t want a bankruptcy. Democracy has been shut down in Detroit.”

Another group also protested Orr’s bankruptcy filing. About 100 city retirees marched outside federal court. Some carried signs stating: “STOP DEBT SERVICE to BANKS that DESTROYED DETROIT.”