Snyder: Threat of lawsuits led to bankruptcy

10/29/2013

DETROIT — Michigan Gov. Rick Snyder testified Monday that lawsuits filed against him, the Detroit emergency manager, and others by city debt holders proved to be the final straw that led him to authorize the city to file for bankruptcy.

Mr. Snyder said the filing wasn’t an attempt to forestall court-imposed injunctions that could result from the lawsuits.

But he said he was concerned that the lawsuits from state retirees and others showed there “wasn’t a meeting of the minds” and that the city needed to protect itself as it struggled to pay bills.

“Bankruptcy is a very last resort,” he said. “It was a tremendously difficult decision to make, but the right one.”

Mr. Snyder testified during the fourth day of a federal trial before Judge Steven Rhodes to determine whether the city can fix its finances in bankruptcy court.

His testimony centered on what led to the bankruptcy filing, as well as a decision in March to name bankruptcy expert Kevyn Orr as Detroit’s emergency manager.

In the days leading up to the bankruptcy filing, retirees sued, claiming their pensions are protected by the constitution and at risk in a bankruptcy.

The lawsuits were put on hold with the bankruptcy petition.

Detroit must show it is broke and tried in good faith to negotiate with creditors. Attorneys who oppose the filing seeking the largest municipal bankruptcy protection in U.S. history have tried to build a case that bankruptcy was a predetermined course or inevitable outcome.