Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Detroit's Bankruptcy Eligibility Trial Kicks Off
Author: Joel R. Glucksman
Date: November 5, 2013
Key Contacts
Back
The highly publicized trial that will determine Detroit’s eligibility to file the largest municipal bankruptcy in U.S. history kicked off on Oct. 23, with the expected opposition from creditors and labor unions.
Representatives for the city are urging U.S. Bankruptcy Judge Steven Rhodes to approve the city’s petition to file for protection under Chapter 9 of the bankruptcy law, arguing that this is the only way Detroit can avoid a loss of 65 cents of every tax dollar being allocated to debt and other obligations. Should this occur, the city says it would have insufficient funding to maintain the public services that the city’s 700,000 residents rely upon, The Associated Press reported. If Judge Rhodes agrees with the argument, Detroit would be permitted to attempt to restructure roughly $18 billion in debt through municipal bankruptcy proceedings.
However, the list of creditors and pensioners opposing the city’s eligibility is long, and the labor unions argue that the city had failed to negotiate with the creditors in good faith – a key precondition that must be satisfied before a city or county can seek municipal bankruptcy protection. Sharon Levine, who represents Michigan Council 25 of the American Federation of State, County, and Municipal Employees, said that Detroit officials made unreasonable offers over the summer, rather than taking the time to explore all options, USA Today reported.
“Detroit has a lot of problems,” Levine told reporters. “It was the biggest Chapter 9 that was ever filed. If there are huge problems, perhaps we should have taken a little time to consider them.”
The trial will be closely watched by legal analysts, creditors, pension funds, and officials of financially distressed cities that may be contemplating bankruptcy. The proceedings – if permitted to move forward – will also set a landmark precedent for the treatment of pension obligations during municipal bankruptcies.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
Crypto Compliance: A Comprehensive Guide
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.