Judge urges immediate implementation of Detroit bankruptcy plan News
Judge urges immediate implementation of Detroit bankruptcy plan

[JURIST] A judge for the US Bankruptcy Court for the Eastern District of Michigan [official website] on Wednesday urged that the newly approved [opinion, PDF] plan to resolve Detroit’s bankruptcy be implemented as soon as possible. The plan, which was approved on Friday by US Bankruptcy Judge Steven Rhodes, will cut seven of the city’s 18 billion dollars of debt. No order has been issued to set an effective date for the plan’s measures, but the judge did waive [Reuters report] the 14-day automatic stay on the plan of adjustment. A hearing on setting an official start date is expected to be held on November 24. The issue of legal fees accrued by the city during the 16 month bankruptcy process also remains to be resolved, and is scheduled to be mediated in early December.

When the city of Detroit filed for Chapter 9 bankruptcy [JURIST backgrounder] last July the city gained the dubious distinction of becoming the largest bankruptcy by a local government in US history. Earlier this month the US Bankruptcy Court for the Eastern District of Michigan approved [JURIST report] a plan to resolve Detroit’s seven billion dollars of debt and return the city to solvency. In June three UN rights experts condemned [JURIST report] the city of Detroit’s Water and Sewage Department disconnection of water services for failure to pay due to lack of means as a violation of human rights. The ongoing water shut-off by Detroit’s heavily-indebted water and sewer system has been linked to Detroit’s broader bankruptcy proceedings [ThinkProgress report]. In February Michigan Governor Rick Snyder unveiled a new state budget [JURIST report] that would allocate state funds to be used to cover Detroit workers’ pensions. Also in February Detroit filed a lawsuit [JURIST report] to invalidate $1.44 billion of pension debt.